Paso Robles City Council
May 2, 2023

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 11
USInflationCalculator.com, September 13, 2022
*The latest inflation data (12-month based) is always displayed in the chart’s final column.

On September 21, 2022, the Federal Reserve raised its benchmark interest rate by 75-basis points for the for third time this year in its fight against a 40-year high in inflation. The preceding 75-bais point hikes were announce in June and July, respectively. This follows a 50-basis point increase on May 5, 2022, and a 25-basis point increase on March 16, 2022.

It’s easy to forget that the Fed was holding the federal funds rate at around zero as recently as the first quarter of 2022. The Fed was also still buying billions of dollars of bonds every month to stimulate the economy. All despite 40-year highs in various measures of U.S. inflation.

CONCLUSION
It is apparent that San Luis Obispo County has been recovering from the recent pandemic. Further, a rebound in the housing markets has helped the local economy as well. Despite expectations of a mild recession looming in the coming months, driven by the Federal Reserve raising interest rates to fight inflation, the general consensus in the marketplace is that the County will continue to remain stable over the course of the next year, with slow growth moving forward.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 12

NEIGHBORHOOD DESCRIPTION
The subject is located in the Paso Robles Municipal Airport, a contiguous section of the incorporated City of Paso Robles. The airport is approximately 4 miles northeast of downtown Paso Robles. A map of the airport and its environs is presented below.

NEIGHBORHOOD MAP

PASO ROBLES MUNICIPAL AIRPORT
The area around the Paso Robles Airport, known as Airport Road Industrial Park, is home to aviation maintenance providers and facilities, as well as aviation parts manufacturers and other related businesses. Under the city's direction, sections of the industrial park have been developed with utilities and infrastructure improvements, in addition to aircraft hangar and aviation service facilities being constructed. Currently, the industrial park offers over 500,000 square feet of industrial building space in operation, housing approximately 50 individual businesses, and providing over 700 jobs in the community. The number of aircraft based at the airport has grown from 55 at the time of city acquisition in 1973, to over 200 today. The airport is home to a CalFire Air Attack Base, providing Kern, Monterey, and San Luis Obispo Counties with wildfire air-support. Access to central Paso Robles from the airport is via Airport Road and Highway 46.

SUBJECT
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 13

PASO ROBLES
Paso Robles has an estimated population of 31,176 as of January 2022, with a median household income of $78,415, as compiled by the Site-To-Do-Business (STDB). The city’s median household income is projected to increase by 23% over the next five years. STDB reports the median home value in Paso Robles is $577,525 as of 2022. This is also expected to increase over the next five years.

NEIGHBORHOOD CONCLUSION
Overall, the neighborhood is largely rural and is primarily dominated by the airport, which offers commercial and industrial zoned lots. Although surrounded by rural residential and agricultural uses, median incomes and home prices are expected to increase over the next five years. Generally, the neighborhood is stable.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 14

INDUSTRIAL MARKET OVERVIEW
Given the industrial nature of the subject property, a market overview of the industrial market in San Luis Obispo County is appropriate. Pertinent information was obtained from CoStar, a leading commercial real estate company and from market participants.

COSTAR INDUSTRIAL REPORT

OVERVIEW
Industrial rents in the San Luis Obispo Market were rising at a 7.3% annual rate during the fourth quarter of 2022 and have posted an average annual gain of 5.8% over the past three years. In addition to 79,000 SF that has delivered over the past three years (a cumulative inventory expansion of 0.9%), there is 10,000 SF currently underway, representing a fractional expansion of the existing inventory. Vacancies were basically in line with the 10-year average as of the fourth quarter 2022 and were little changed over the past four quarters.

Employment in the metro was recently increasing at an annual rate of 4.7%, or a gain of about 5,500 jobs. While a positive result, this does represent the weakest rate of job creation in the past twelve months, which at one point was as high as 7.3%.

Source: CoStar’s San Luis Obispo Industrial Report.

VACANCY AND ABSORPTION
The vacancy rate for the county’s Industrial market has declined since the fourth quarter of 2016, when it was approximately 5.25%. It has dropped as low as 1.5% in the first quarter of 2022 but is currently sitting at 2.5%. This compares favorably to the national vacancy rate, approximately 4.0%.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 15
Third quarter 2022 deliveries of nearly 40,000 square-feet pushed the absorption to a negative 30,000± square-feet. As shown in the “Key Indicators” table on the preceding page, current quarter absorption and delivery figures haven’t been complied yet, but over 10,000 square-feet is currently under construction.

Source: CoStar’s San Luis Obispo Industrial Report.

ASKING RENTS
Since the fourth quarter 2016, asking rents in the county have steadily increased and the average monthly asking rent is currently at $1.30 per square-foot. The pace of rent increases is expected to remain strong through 2023 before leveling off somewhat from 2024 through 2026.

Source: CoStar’s San Luis Obispo Industrial Report.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 16

CONSTRUCTION AND INVENTORY
The third quarter 2022 saw one delivery of new industrial space consisting of 39,000 square-feet, the first in nearly two years. A more modest delivery of approximately 10,000 square-feet is expected in November 2022. Both projects are located in the South SLO submarket, which includes the City of San Luis Obispo. However, CoStar has not recognized the construction of seven buildings totaling over 420,000 square-feet in the Paso Commons development in Paso Robles (North 101 Corridor submarket).

According to the leasing broker, one building with 44,626 square-feet has been delivered in the third quarter 2022, with the remainder to be delivered in December 2022.

Source: CoStar’s San Luis Obispo Industrial Report.

Industrial inventory currently sits at 627 buildings county-wide, comprising of a total of 9,154,000 square-feet. The South SLO submarket has the largest share of buildings at 42.5%, followed by the North 101 Corridor, which includes Paso Robles, at 38.5%.

SALES
The San Luis Obispo industrial market contains one of the smaller inventories in the nation. In turn, the market saw limited investment relative to its peers in the past year, with 19 transactions. That was a drop in the sales count relative to the five-year average in the metro. Annual sales volume has averaged $33.7 million over the past five years, and the 12-month high in investment volume hit $57.0 million over that stretch. In the past 12 months specifically, $55.8 million worth of industrial assets sold.

Logistics facilities drove recent sales volume, accounting for $49.0 million in confirmed transactions.

The market price, which is based on the price movement of every industrial property in each sector in the metro and informed by actual transactions, now sits at $213/SF. That figure is up over this time last year, and the price itself sits way above the average pricing for the overall country. As depicted in the chart presented on the following page, the5.2% market cap rate is within a few basis points of where it was 12 months ago, but the cap rate is structurally lower here than those found across the United States.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 17
Source: CoStar’s San Luis Obispo Industrial Report.

NORTH 101 CORRIDOR SUBMARKET
Paso Robles is included in the North 101 Corridor submarket, which ranks last out of the seven county submarkets with the lowest current average monthly asking rent of $1.10 per square-foot; but it ranks first for the lowest vacancy rate, currently at 1.8%, and absorption of 3,643 square-feet in the third quarter 2022. Inventory sits at 195 buildings, representing 3,523,000 square-feet.

Current asking rates pulled from Loopnet.com show a range between $1.15 to $1.40 per square-foot. As noted below, new construction expected to be delivered late 2023 is listed at $1.20 per square-foot.

Market participants point to two
developments currently under construction:
the Paso Commons in Paso Robles and the
Del Rio Market Place in Atascadero. By the
end of the fourth quarter 2022, the sevenbuilding development of Paso Commons is expected to deliver an additional 375,000
square-feet of space to the 44,000 squarefeet of space delivered in third quarter 2022, raising the submarket inventory to 202
buildings totaling approximately 3,943,000 square-feet.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 18
The ten building Del Rio Market Place at the
signalized intersection of El Camino Real and
Del Rio Road in Atascadero is expected to
deliver two industrial buildings with over
50,000 square-feet in September 2023. The
eight other buildings within this project are
dedicated to office and retail uses. The NNN
monthly asking rate for the industrial space is
currently $1.20 per square-foot.

INDUSTRIAL MARKET OVERVIEW CONCLUSION
While the industrial market remained resilient throughout the COVID-19 pandemic, the post pandemic outlook is tempered by the highest inflation in four decades, which has resulted in higher interest rates set by the Federal Reserve to combat the high inflation. However, market participants noted that rising interest rates haven’t affected land values yet.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 19

PROPERTY DESCRIPTION

GENERAL
The subject property is 2.49± acres (108,464± square-feet) of vacant, rough-graded land located at the Paso Robles Municipal Airport and is within the jurisdiction of the city of Paso Robles.

EXISTING SITE ATTRIBUTES
Assessor’s Parcel Numbers 025-471-030
Owner City of El Paso de Robles, a California municipal corporation.

Sales History The subject property has not transferred within the previous ten-year period. Further, to the best of our
knowledge the property is currently not offered for
sale.

Zoning AP PD, Airport Planned Development, City of Paso Robles
Within the Airport Zoning District, permitted uses
include agriculture, food processing and service,
automotive sales and services, commercial offices,
commercial retail, limited health care facilities,
wholesale services, warehousing, and various
manufacturing uses.

General Plan Designation BP, Business Park, City of Paso Robles The BP designation is intended to provide areas for
clean and attractive businesses and industries in
which all activities are conducted indoors (some
limited outdoor storage and/or activities may be
permitted via approval of a conditional use permit
and if completely screened). Where appropriate,
compatible convenience and highway commercial
land uses may be located in the Business Park
category.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 20
Frontage / Access The subject has 34-feet of frontage on Cloud Way, which terminates in a cul-de-sac adjacent to the
subject. Secondary access is available via an
easement leading to the airport taxiway.

Size 2.49± acres, or 108,464± square-feet.

Source: San Luis Obispo County Assessor’s Parcel Map
Shape Rectangular
Topography Level, but rough-graded
Flood Information The property is located in Flood Zone X (unshaded), an area of minimal flood hazard. Per FEMA Map
06079C0392G, dated November 16, 2012.

Seismic Information The subject property is not within a Fault-Rupture Hazard Zone (formerly an Alquist-Priolo Special
Studies Zone), according to Special Publication 42,
"Fault-Rupture Hazard Zones in California",
published by the California Department of
Conservation, Division of Mines and Geology,
revised 2007. No active faults are located on or in
the proximity of the property. However, strong
earthquakes generated along any of the active
California faults may affect the site depending on
the characteristics of the earthquake and the
location of the epicenter. In general, the effects
should be confined to shaking and/or acceleration
(shock waves) and potential damage to structures
should be minimized by employing adequate design
and construction procedures.

Because San Luis Obispo County, and most of the
State of California, is a seismically active region, the potential for earthquake-induced hazards must be
acknowledged. Current engineering design, and
construction practices, such as the Uniform Building
Code, provides the opportunity to reduce
earthquake related hazards.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 21
Parcel Improvements The site is secured by a chain-link fence with an electric powered iron gate. Further, the western
20± feet is a paved driveway of an estimated 4,440±
square-feet providing easement access to the parcel
directly to the north, APN 025-471-029.

Lease Status None
Easements / Encroachments A title report was not made available to the appraisers for review, who therefore assume no
atypical easements or encroachments encumber
the subject property (see Extraordinary Assumption
No. 1). Further, it appears an access easement
encumbers the west 20-feet of the subject.

However, peripheral access easements are typical
of industrial properties and are therefore inherent
in the value of the subject property.

Private Restrictions None noted by the client. Further, a title report was not made available to the appraisers for review,
who therefore assume no private restrictions
encumber the subject property (see Extraordinary
Assumption No. 1).

Cultural, Recreational, and Historic Significance None known to exist Property Taxes As the property is owned by a municipal
government entity, the site is not subject to
property taxes. However, should the site be
developed to private industrial use, the structural
improvements would then be subject to property
taxes similar to a developed airport parcel, 3010
Rollie Gates Drive, which has an effective tax rate of

1.12378%.

OVERALL COMMENTS
The subject property consists of a single, vacant lot zoned for industrial or service commercial uses. The size, 2.49± acres (108,464± square-feet), and the available municipal utilities available are typical for the airport and competing Paso Robles industrial neighborhoods. Overall access is considered average while exposure is considered below average. The paved, nonexclusive access easement encumbers the western periphery and is considered to have no impact on the overall land value.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 22

HIGHEST AND BEST USE ANALYSIS
Highest and best use may be defined as the reasonably probable use of property that results in the highest value.

There are four criteria used in the highest and best use analysis process. These are:

1. Legally Permissible Use
What uses are permitted legally under existing zoning, building codes, historic district controls, environmental regulations, deed (private) restrictions, and long-term lease provisions on the site in question?

2. Physically Possible Use
What uses of the site are physically possible, given its size, shape, area, terrain, soils composition, accessibility, assembly potential, and risk potential from natural disasters?

3. Financially Feasible Use
Which possible and permissible uses will produce a positive net return to the owner of the property?

4. Maximally Productive Use
Among the feasible uses, which use will produce the highest residual land value consistent with the rate of return warranted by the market for that use? Since improved properties sometimes do not, in fact, contain the improvements that would generate the greatest return to the land, the highest and best use of the land as if it were vacant, as well as the highest and best use of the property as it is currently improved, normally are considered. In extreme cases, this analysis will call into question whether the existing improvements should be preserved.

Usually, however, the analysis shows that if a property is already improved, the continuing use of the existing improvements yields more total return to the land than does the razing of the improvements in favor of alternative uses.

Given that the subject property is vacant land, only the highest and best use as vacant is relevant in the analysis.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 23

HIGHEST AND BEST USE, AS VACANT

LEGALLY PERMISSIBLE USES
In accordance with the definition of highest and best use, it is appropriate to analyze the subject property as though vacant as it relates to legal permissibility, physical possibility, financial feasibility and maximum productivity. Possible uses are constrained by legal restrictions on the property both private and public. As previously discussed, the subject is zoned for Airport, Planned Development, and the General Plan designation is Business Park.

Overall, the legally permissible uses cover a variety of uses, including agriculture, food processing and service, automotive sales and services, commercial offices, commercial retail, limited health care facilities, wholesale services, warehousing, and various manufacturing uses.

PHYSICALLY POSSIBLE USES
The size, topography, and location of the subject are important factors in determining the use of the property. The size of the site can have a significant effect on the type of development that is possible and on the economies of scale. The 2.49± acre size of the subject is too small for commercial agriculture.

Further, the site lacks the exposure desired for automotive sales and services, commercial retail, and health care facilities. Therefore, the remining physically possible uses are limited to food processing and service, commercial offices, wholesale services, warehousing, and various manufacturing uses. These remaining uses can best be described as light industrial use.

FINANCIALLY FEASIBLE / MAXIMALLY PRODUCTIVE USES
The proposed property improvement must be able to deliver an income return that generates the market value sufficient to pay for the developmental costs, the risks involved, and profit appropriate for the type of development.

With the demand for office space declining in the post pandemic economy, office development is currently speculative and would not be feasible in the near to mid future. Given the current supply of industrial product along with an analysis of current construction costs and the amount of construction currently underway in the submarket, light industrial development is concluded to be currently the most financially feasible and maximally productive use.

HIGHEST AND BEST USE CONCLUSION
Considering all the preceding factors, the highest and best use of the properties is for light industrial development.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 24

VALUATION

VALUATION METHOD AND CONSIDERATIONS
The opinion of value will be developed in accordance with accepted valuation principles, consistent with California eminent domain law (Code of Civil Procedure 1230.010). Every effort has been made to conform to The Uniform Relocation Assistance and Real Property Acquisition Policies Act, 1970 as amended; the Uniform Standards of Professional Practice (USPAP) of the Appraisal foundation; and Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Practice (USPAP).

The three recognized approaches to value are the Sales Comparison Approach, the Income Approach and the Cost Approach. We have utilized the Sales Comparison Approach to develop the opinion of the fair market value for the larger parcel land and the remainder parcel. The Sales Comparison Approach compares the similar properties that have recently sold in the market area to the larger parcel and is usually the preferred method of valuation.

The initial stages of the appraisal process include the investigation, organization, and analysis of relevant market data and other information that relates to the value of the larger parcel. By searching public records and interviewing buyers, sellers, real estate agents, and others, we have found data pertaining to sales of properties reasonably comparable to the subject parcel. The comparable sales are compared to the subject and analyzed based on the appraiser's knowledge of market behavior, in order to derive an indication of fair market value. All sale properties were compared based on a price per square foot value, consistent with the market.

SALES COMPARISON APPROACH
The property appraised consists of 2.49± acre, or 108,464± square feet, of vacant industrial land. Effort was made to find sales within close proximity to the larger parcel with similar qualities and characteristics. The following market transactions were considered in this analysis and are concluded the best comparable sales available for analysis in the market. A summary of comparable industrial land sales is introduced in the following table to develop an opinion of the fair market value of the subject site as if vacant and available to develop to its highest and best use.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 25

COMPARABLE LAND SALES SUMMARY TABLE AND MAP
Sale No.

BRI No.

Location
APN(s)
Grantor
Grantee
Sale Date
Doc. No.

Sale Price
Price /SF
Land Use
Size: Acres
SF
S-1
6899
Lot 2, Ardmore Road
Paso Robles, CA
APN: 025-362-045
Ardmore Development
Co LLC
Case Paso LLC
4/22/2022
017879
$1,000,000
$7.04
Commercial/
Light Industrial

3.26±
142,006±
S-2
6902
Lot 18, Germaine Way
Paso Robles, CA
APN: 025-421-088
(was 025-425-007)
Esteem Land Company
LLC
Beta USA Inc
3/2/2022
009488
$700,000
$5.15
Planned
Industrial

3.12±
135,907±
S-3
6896
Lot 13, Wisteria Lane
Paso Robles, CA
APN: 025-425-016
Margie Danley 2005
Revocable Trust, et al
PRG Paso Industrial
Holdings LLC
8/31/2021
060246
$1,080,000
$9.02
Planned
Industrial

2.75±
119,790±
S-4
6897
Lot 16, Wisteria Lane
Paso Robles, CA
APN: 025-425-019
Wheeler-Barinka Family
Trust
PRG Paso Industrial
Holdings LLC
7/6/2021
047453
$856,000
$7.74
Planned
Industrial

2.54±
110,642±
S-5
6898
430 Germaine Way
Paso Robles, CA
APN: 025-421-038
(was 025-425-006)
Forefront Properties LLC
Beta USA Inc
4/12/2021
027295
$753,000
$6.38
Planned
Industrial

2.71±
118,048±

SUBJECT
Lot 2, Cloud Way
Paso Robles, CA
APN: 025-471-030
Appraisal --- ---
Airport Planned
Development

2.49±
108,464±
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 26

DISCUSSION OF SALE COMPARABLES
This analysis identifies the similarities and differences between the larger parcel and comparable properties. The primary elements of comparison include property rights, financing terms, conditions of sale (motivation), market conditions (sale date), and physical characteristics (e.g., zoning, utilities, soil quality, site improvements, location, access, etc.). The sales selected for comparison are considered the best available.

The market conditions for the following sales span from April 2021 through April 2022, generally before the interest rate hikes by the Federal Reserve. However, land sales are not typically financed (nor were any sales within the dataset presented) and rising interest rates have not yet impacted the land market.

Comparable Land Sale 1
This is the sale of 3.26± acres (142,006± square-feet)
of vacant industrial land located on Ardmore Road,
Paso Robles, California. Further, it is located on the
southwest corner of the 90-degree north-to-west
bend in Ardmore Road, an interior street. Escrow
closed April 22, 2022, for $1,000,000, or $7.04 per
square foot, in an all-cash transaction. The buyer said there were no atypical sale conditions. The property
had a secured yard at the time of sale, which the
buyer intends to use for equipment storage for his
construction business located diagonally across (west)
Ardmore Road. The seller was a neighbor located directly across Ardmore Road. The neighborhood is a new development with all municipal utilities necessary for development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as CS, Service Commercial and the zoning is C3, Service Commercial. The site is level to street grade with a rectangle shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.

The Ardmore Business Park location for this comparable is similar to the subject, as is service commercial zoning. While it has a slightly larger size, which is indicative of a lower unit value, it also had a secured yard and slightly superior market conditions. Overall, this sale indicates a unit value less than $7.04 per square foot for the subject.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 27
Comparable Land Sale 2
This is the sale of 3.12± acres (135,907± square-feet)
of vacant industrial land located at the north
terminus of Germaine Way, a cul-de-sac, in Paso
Robles, California, and identified as Lot 18. Escrow
closed March 2, 2022, for $700,000, or $5.15 per
square foot, in an all-cash transaction. Two brokers
said there were no atypical sale conditions.

However, the buyer previously purchased the west
adjacent parcel (APN 025-421-038) in April 2021 for
$753,000, or $6.38 per square-foot. The brokers
noted this sale had open space requirements and it
was encumbered with an access easement along the western property line, both of which reduced the usable area. These factors outweighed any potential buyer motivation for assemblage, to which neither broker gave any weight. The Golden Hills Business Park is a new development with all municipal utilities necessary for development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangular shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.

This comparable sale shares many similarities with the subject, including size, location, and topography.

And although the peripheral access easement is also similar to the subject, the open space is an inferior factor. Further, both brokers said that any buyer’s assemblage motivation didn’t impact the sales price.

Therefore, placing weight on the open space requirement, this sale warrants a unit value above $5.15 for the subject.

Comparable Land Sale 3
This sale totaled 2.75± acres (119,790± square-feet) of vacant industrial land located on the southwest corner of Wisteria Lane and Germaine Way, Paso Robles, California.

Escrow closed August 31, 2021, for $1,080,000, or $9.02 per square foot, in an all-cash transaction. The buyer’s broker said there were no atypical sale conditions.

However, the buyer previously purchased a similar lot on the opposite southeast corner in July 2021 for $856,000, or $7.74 per square-foot (see Sale 4), and the broker said the primary difference between the two sales was buyer
motivation, not market conditions. The neighborhood is a Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 28
developing business park with all municipal utilities necessary for industrial development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangular shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.

This comparable sale shares several similarities with the subject, including size, business park location, zoning, and topography. However, the corner location offers superior access, and the buyer assemblage impacted the sale price. With no offsetting inferior factors, this sale warrants a subject unit value below $9.02 per square-foot.

Comparable Land Sale 4
This is the sale of 2.54± acres (110,642± square-feet) of vacant industrial land located on the southeast corner of Wisteria Lane and Germaine Way, Paso Robles,
California. Escrow closed July 6, 2021, for $856,000, or $7.74 per square foot, in an all-cash transaction. The
buyer’s broker said there were no atypical sale
conditions. However, the buyer later purchased a similar lot on the opposite southwest corner in late August
2021 for $1,080,000, or $9.02 per square-foot (see Sale 3), and the broker said the primary difference between
the two sales was buyer motivation, not market
conditions. The Golden Hills Business Park is a new
development with all municipal utilities necessary for industrial development available in street and offsite curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangular shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.

This comparable sale shares several similarities with the subject, including size, business park location, zoning, and topography. However, the corner location offers superior access and with no offsetting inferior factors, this sale indicates a unit value below $7.74 per square-foot for the subject.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 29
Comparable Land Sale 5
This is the sale of 2.71± acres (118,048± square-feet) of vacant industrial land located at 430 Germaine Way,
Paso Robles, California. Further, it is located at the north terminus of Germaine Way, a cul-de-sac. Escrow closed
April 12, 2021, for $753,000, or $6.38 per square foot, in an all-cash transaction. Both brokers said there were no atypical sale conditions. The Golden Hills Business Park is a new development with all municipal utilities necessary for development available in street and off-site curbs, gutters, and sidewalks installed. The City of Paso Robles General Plan designates the property as BP, Business
Park, and the zoning is PM, Planned Industrial. The site is level to street grade with a rectangle shape.

According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.

This comparable sale shares many similarities with the subject, including size, business park location, zoning, topography, and location at the end of cul-de-sac. With no superior or inferior factors to consider, this sale warrants a subject unit value near $6.38 per square-foot.

LAND VALUE CONCLUSION
Based on the previous discussion, the comparable sales indicate the subject bracketed value range is from $5.15 to $7.04 per square foot as shown in the following table.

Sale No. Subject Value Less Than /
Greater Than Sale Price /SF Sale Date Size (Acres)
S-3 < $9.02 8/31/2021 2.75±
S-4 < $7.74 7/6/2021 2.54±
S-1 < $7.04 4/22/2022 3.26±
The Subject unit value range is similar to $6.38 and less than $7.04 per square-foot.

S-5 ≈ $6.38 4/12/2021 2.71±
S-2 > $5.15 3/2/2022 3.12±
Based on the preceding comparable analysis, the subject is bracketed by S-1 and S-2, respectively $7.04 and $5.15 per square-foot. Further, the subject is determined to be similar in value to S-5 at $6.38 per square-foot. With superior corner access, S-1 warrants a higher unit value than the subject. Conversely, S-2 indicates a lower unit value compared to the subject due to the open space requirements. Given the similarities between the subject and S-5, and the lack of any adjustments for superior or inferior factors, the greatest weight is placed on this comparable sale. Therefore, a unit value of $6.50 per square foot for the subject is concluded and is well supported by the comparable data.

Value of the Subject
108,464± SF x $6.50/SF = $ 705,016
Rounded $ 705,000
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 30

VALUE OF THE GROUND LEASE
The next step in the valuation is to estimate a market rate of return to the fee value of the land in order to estimate market rent. Although there are inherent challenges with estimating a rate of return, there are various sources of rates of return that we will consider, including investor surveys and ground leases.

INVESTOR SURVEY
One method of determining an appropriate rate of return is to look at a published investor survey for land leases. One of the most widely used and respected publications is the RealtyRates.com Investor Survey. The Investor Survey publishes prevailing land lease capitalization rates and discount rates on a national level. According to the publication, the former reflects initial rates of return on appraised values for vacant land proposed for development but does not address increases in land lease payments or the reversion but may include percentage rent. These rates are considered more applicable to the subject.

The latter are internal rates of return being achieved by landowners on improved properties. As such, they include changes in land lease payments, percentage rent where applicable and the reversion of the entire property at the termination of the lease. These rates are not really applicable to the subject since no improvements are being analyzed for this analysis.

The following table summarizes the information for 4th Quarter 2022 data from RealtyRates.com.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 31
The subject’s specific use type as industrial land displays a range in cap rates from 3.35% to 10.72%. The subject property would likely see cap rates toward the middle of the range given the high demand for more typical industrial uses. Overall, given that these are broad and general ranges across the national marketplace, guarded reliance is placed on these investor surveys.

GROUND LEASE CAPITALIZATION RATES
Another method of estimating a rate of return is by examining ground lease discount rates in the region relative to industrial land prices. Market transactions of ground leases for industrial properties in the region are essentially non-existent. Accordingly, sales of all property types on ground leases were surveyed in the San Luis Obispo County and the adjacent Kern County to extract cap rates from the market. The results of that survey are displayed on the following page.

San Luis Obispo County and Kern County Ground Lease Survey City Property Type Bldg Size (SF) Tenant Sale Date Sale Price Cap Rate Bakersfield QSR 2,200 Starbucks Oct-22 $2,666,667 3.75% Buttonwillow QSR 4,187 Carl's Jr. Jul-22 $2,467,829 5.25% Nipomo QSR 1,000 Dutch Bros. Jul-22 $2,800,000 3.75%
Bakersfield QSR 1,820 Carl's Jr. Jun-22 $2,800,000 3.93% Bakersfield QSR 3,200 Carl's Jr. Jun-22 $2,150,000 4.45% Bakersfield QSR 2,510 Jack In the Box Mar-22 $2,025,000 4.48% Bakersfield QSR 2,080 Tacos La Villa Feb-22 $1,720,000 5.23% Bakersfield QSR 856 Dutch Bros. Jan-22 $2,225,000 4.00% Arroyo Grande QSR 2,040 Dutch Bros. Jun-21 $2,828,000 4.35% Santa Maria QSR 862 Dutch Bros. Mar-21 $2,762,500 4.52% Atascadero QSR 2,800 Burger King Dec-20 $1,450,000 4.11% Cap rates for ground lease sales will largely depend on the creditworthiness of the tenant, the remaining lease term, and the age and condition of the building improvements. The range displayed in the market is nonetheless relatively narrow, between 3.75% and 5.25%. However, the cap rates presented above represent improved properties, which carry significantly less risk, as they are secured by credited tenants, long term leases and building improvements which are collateral if the tenant walks from the lease. Further, the bulk of these tenants are national fast food and retail chains that are considered to carry minimal risk from an investor’s perspective. Per conversations with local market participants, when dealing with atypical ground lease property types, 8.0% is typically used as a base cap rate, and then adjustments are made from there to account for specific risk characteristics such as location, quality of the tenant, overarching market conditions, etc. The subject property would be considered relatively safe given the robust market conditions. Accordingly, a cap rate below 8.0%, consistent with the rates displayed in the sales above, would be appropriate for this site. However, the airfield zone of the subject would likely be perceived to carry slightly more risk given the less intensive allowable uses.

Though it is noted that there is still strong demand for those uses, a cap rate above the range displayed by the ground lease sales is warranted for that portion of the property.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 32

RECONCILIATION OF RATES AND CONCLUSION
Based on the investor survey and the market ground lease sales, appropriate rates for the subject can be determined. The indicated cap rate ranges are summarized below.

Indicated Market Cap Rates
Minimum Maximum Average
Investor Survey 3.35% 10.72% 7.65%
Ground Leases 3.75% 5.25% 4.35%
For a vacant industrial use property such as the subject, an appropriate cap rate should still be above those displayed by the quick-serve restaurants with national credit tenants on long-term deals.

However, a rate below the base of 8.0% is warranted given the limited risk associated with the site and the intended 30 to 40 year ground lease term. Therefore, a concluded rate of 7.5% is appropriate for the general industrial portion of the subject property.

CONCLUSION OF MARKET GROUND LEASE RATE
Based on the previously concluded land values and cap rates, the concluded fair market lease rate for the subject property is summarized in the following table.

Market Ground Lease Rate Summary As of November 15, 2022 Size (Ac) Size (SF) Price /SF Indicated
Land Value
Cap
Rate
Indicated
Annual Rent

2.49 108,464 $6.50 $705,016 7.5% $52,876
The rounded annual rent is concluded to be $52,900.

OPINION OF MARKET VALUE
The rounded market value of the subject property is concluded as:

Seven Hundred Five Thousand Dollars
($705,000)
The rounded annual ground lease value is determined to be:

Fifty-two Thousand Nine Hundred Dollars
($52,900)
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176 33

APPENDIX
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176
APPRAISERS’ CERTIFICATIONS
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATION
I certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.

4. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

5. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

6. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

10. As of the date of this report, I have completed the continuing education requirements for designated members of the Appraisal Institute.

11. I have not made a personal inspection of the property that is the subject of this report.

12. I have not revealed the findings and results of this appraisal to anyone other than the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

13. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

14. To the best of my knowledge, no portion of the value of the property appraised consists of items Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176
which are non-compensable under the established laws of California.

15. My opinion of the total fair market value of the appraised property identified in this report was derived without collusion, coercion or direction as to value.

16. I have neither appraised nor provided any services on this property within the last three years.

17. Fred McGrew provided significant assistance in the preparation of this report including determination of the appraisal problem, collection and analysis of the data, highest and best use analysis, valuation analysis, and the reconciliation in this report under the direct supervision of the undersigned.

David C. Houghton, MAI
Certified General Real Estate Appraiser
California Certificate No. AG039402
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATION
I certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.

4. I have neither appraised nor provided any service pertaining to the subject property in the past three years.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

11. I have neither appraised nor provided any service pertaining to the subject property in the past three years.

12. I have made a personal inspection of the property that is the subject of this report.

13. I have not revealed the findings and results of this appraisal to anyone other than the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176

14. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

15. My opinion of the total fair market value of the appraised property identified in this report was derived without collusion, coercion, or direction as to value.

16. To the best of my knowledge, no portion of the value of the property appraised consists of items which are non-compensable under the established laws of California. It is my understanding that federal funds may be involved in the project that pertains to the subject of this report.

17. Fred McGrew significant assistance in the preparation of this report including determination of the appraisal problem, collection and analysis of the data, highest and best use analysis, valuation analysis, and the reconciliation in this report under the direct supervision of the undersigned.

Ross M. Campbell
Certified General Real Estate Appraiser
California Certificate No. 3003418
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
South-end of subject property looking east from Cloud Way.

Central section of subject property looking east from Cloud Way.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
Northeast corner of subject property looking northeast from Cloud Way.

Northwest corner of subject property looking north from Cloud Way.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
Security gate limiting access to the subject property and to the developed lots along the southern airport taxiway. The gate is situated in the southwest corner of the subject property off Cloud Way.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Lot 2, Cloud Way
Paso Robles, California
BRI 22-176
APPRAISERS’ QUALIFICATIONS
Attachment 3

professional
qualifications
david houghton, MAI
Manager of Agency Appraisal
David Houghton is a Senior Appraiser with Bender Rosenthal (BRI). He has been involved in real estate appraising since 2005 and is a Certifi ed General Appraiser in the State of California. He has professional experience appraising a wide range of property types, including industrial, offi ce, medical offi ce, retail, multifamily, condemnation, right of way, residential subdivisions, and various agricultural/rural residential property types.

Between 2007 and 2014 he worked exclusively on low income housing appraisal assignments. While focused on that specialty, Dave gained experience appraising aff ordable housing and conducting market studies for Low Income Housing Tax Credit (LIHTC) developers. In 2014, David began working with BRI and has since shifted his focus and expertise into right of way appraisal assignments.

Geographically, Dave has appraised properties and completed market studies throughout Southern and Northern California, Washington, Hawaii, and Nevada, with the bulk of the experience in Southern and Northern California.

YEARS OF EXPERIENCE
17 Years (with BRI since 2014)

EDUCATION
BS, Science of Business
Management
University of Phoenix
Phoenix, Arizona

PROFESSIONAL REGISTRATIONS
California Certifi ed General
Real Estate Appraiser
AG 39402
Professional Affiliations
Northern California Chapter of
Appraisal Institute
Designations
MAI, Appraisal Institute
representative valuations include
Offi ce – Existing and proposed offi ce properties in Sacramento Region and Central Valley.

Retail – Existing and proposed retail properties in Northern and Southern California.

Industrial – Existing and proposed industrial properties in Sacramento Region and Central Valley.

Multi-family – Existing and proposed multi-family properties in Northern and Southern California, the state of Washington, New Mexico, Nevada and Hawaii.

Mixed Use – Existing and proposed mixed use properties in Northern and Southern California.

Subdivision – Proposed residential subdivisions in Sacramento Region and Central Valley.

Eminent Domain – Improved and unimproved properties involving full and partial takings for municipalities, quasi-public companies, and property owners.

Agricultural – Vineyards, dairies, orchards, fi eld/row crop land, and rural residential properties.

Land – Various types of land appraised such as commercial land, retail pad sites, residential land, transitional land, and agricultural/ rural residential land.

Multi-family Market Studies – Existing and proposed multi-family LIHTC/HUD/USDA properties in Northern and Southern California, the state of Washington, New Mexico, Nevada and Hawaii.

Headquarters: 2825 WaƩ Avenue, Suite 200 | Sacramento, CA 95821 | 916.978.4900 Attachment 3

professional
qualifications
Ross campbell
Appraiser
Ross Campbell has been involved in real estate appraising and consulting since 2011. His professional experience in real estate appraisal encompasses a broad range of property types including industrial, office, retail, single family, multi-family, residential subdivisions, agricultural, transitional, and various types of land. Ross also has right of way experience involving both partial and full acquisitions, complex damage/benefit analysis, crop loss scenarios, transportation and utility projects. Over the course of his career he has worked on several specialty property types/projects of note which encompass cell tower sites, water related use properties (both inland and oceanfront), mitigation work, contamination issues, corridor valuations, title claims, conservation easements, and shelter valuation.

Ross received his Bachelor’s degrees in Economics and Sociology:

Organizational Studies, respectively, from The University of California at Davis. He continues his education with courses from the Appraisal Institute and the International Right of Way Association in pursuit of a professional designation.

YEARS OF EXPERIENCE
11 Years (with BRI since 2011)

EDUCATION
BA, Economics
University of California
Davis, California
BA, Sociology: Organizational
Studies
University of California
Davis, California

PROFESSIONAL REGISTRATIONS
California Certified General
Real Estate Appraiser
AG 3003418
Professional Affiliations
Sacramento-Sierra Chapter of
Appraisal Institute
representative valuations include
Industrial – Existing and proposed distribution, storage, and research and development properties.

Office – Existing and proposed general-office, medical-office, and dental-office developments.

Retail – Existing and proposed shopping centers, mixed-use buildings, and restaurants.

Single-Family Residential – Existing and proposed residential subdivisions.

Multifamily Residential – Existing and proposed apartment complexes and condominiums.

Agricultural – Field and row crops, conservation easements, and rural-residential properties.

Land – Retail, office, residential, industrial, transitional, and agricultural land.

Special Use – Cell tower sites, water related sites, transportation and utility corridors.

Eminent Domain – Improved and unimproved properties involving full and partial acquisitions.

Headquarters: 2825 Watt Avenue, Suite 200 | Sacramento, CA 95821 | 916.978.4900 Attachment 3

APPRAISAL REPORT
City of El Paso de Robles
Solar Ground Least Site
Paso Robles, California 93446
APN: 025-450-001 (Portion)
Date of Value: November 15, 2022
Date of Report: December 12, 2022
BRI 22-176
2825 Watt Avenue, Suite 200 Sacramento, California 95821 | www.benderrosenthal.com | 916.978.4900 Attachment 3

2825 Watt Avenue, Suite 200 Sacramento, California 95821 | www.benderrosenthal.com | 916.978.4900 December 12, 2022
Mark Scandalis
Airport Manager, PRB
4912 Wing Way
Paso Robles, California 93446
Re: Appraisal of:

City of Paso Robles Property
Solar Ground Lease Site (22.08± acres)
Paso Robles, California 93446
APN: 025-450-001 (portion)
Dear Mr. Scandalis,
We have prepared this report for the Paso Robles Municipal Airport. The purpose of this appraisal assignment is to determine the fee simple value and market ground lease rate of the subject property.

The intended user of the report is the City of Paso Robles. The function of the appraisal is to assist the airport management in the possible outlease of the subject property.

This is a narrative Appraisal Report as defined by USPAP. As such, it fully presents the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser’s opinion of value. The depth of discussion contained in this report is specific to the needs of the client and of the intended use stated in this report. The following report sets forth the descriptive and factual data, the assumptions and conditions affecting the appraisal, and the findings and analyses that lead to and support our value opinion. The appraiser is not responsible for unauthorized use of this report. Every effort has been made to conform to the Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Appraisal Practice (USPAP). In addition, we have intended to comply with applicable laws. The undersigned conducted the appraisal and prepared the report.

We are pleased to have this opportunity to provide you with professional appraisal services.

BENDER ROSENTHAL, INC.

David C. Houghton, MAI
Certified General Real Estate Appraiser
California Certificate No. AG039402
Ross M. Campbell
Certified General Real Estate Appraiser
California Certificate No. 3003418
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 II

TABLE OF CONTENTS

LETTER OF TRANSMITTAL
TABLE OF CONTENTS.....................................................................................................................................II PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS ................................................................IV Assessor’s Parcel Map
Aerial Photographs
INTRODUCTION.............................................................................................................................................1 Client, Intended Use, Intended User of the Appraisal
Scope of Work
Definitions Used in the Report
General Assumptions and Limiting Conditions
Extraordinary Assumptions and Hypothetical Conditions
SAN LUIS OBISPO COUNTY REGIONAL OVERVIEW .......................................................................................6 Regional Map
Access and Transportation
Cities / Communities
Population
Unemployment Rates
Employment by Industry
Major Employers
Inflation
Conclusion
NEIGHBORHOOD DESCRIPTION..................................................................................................................12 Neighborhood Map
Neighborhood Conclusion
MARKET OVERVIEWS ..................................................................................................................................14 Agriculture overview
Paso Robles Ground Water Basin Map
Paso Robles AVA Map

INDUSTRIAL MARKET OVERVIEW
PROPERTY DESCRIPTION.............................................................................................................................26 General
Existing Site Attributes
HIGHEST AND BEST USE ANALYSIS..............................................................................................................30 Highest and Best Use, As Vacant
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 III
VALUATION.................................................................................................................................................33 Valuation Method and Considerations
Comparable Land Sales Summary Table And Map
Value of the Ground Lease
Opinion of Market Value
APPENDIX....................................................................................................................................................42 Appraisers’ Certifications
Subject Photographs
Appraisers’ Qualifications
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 IV

PROPERTY IDENTIFICATION AND SUMMARY OF SALIENT FACTS
Appraisal Assignment To provide the fee simple value and market ground lease rate of the subject property.

Property Location The subject property is located approximately 350- feet north of the unnamed gravel road leading from
Airport Road to the CalFire Air Attack Base within the
Paso Robles Municipal Airport.

San Luis Obispo County, California

PROPERTY DATA
Assessor’s Parcel Number: 025-450-001 (portion)
Size 22.08± acres, or 961,882± square-feet.

Source: Client provided drawing
Owner of Record City of El Paso de Robles, a California municipal corporation (see Extraordinary Assumption No. 1).

Site Description The subject property is vacant, rough graded land.

Zoning AP PD, Airport Planned Development, City of Paso Robles
General Plan Designation BP, Business Park, City of Paso Robles Highest and Best Use (as Vacant) Develop to electric power generation from solar panels.

Fee Simple Value $193,000
Market Ground Lease Value $15,500 Annually
Date of Inspection November 15, 2022
Date of Value November 15, 2022
Date of Report December 12, 2022
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 V
ASSESSOR’S PARCEL MAP
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 VI

AERIAL PHOTOGRAPHS
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 1

INTRODUCTION

CLIENT, INTENDED USE, INTENDED USER OF THE APPRAISAL
The client and intended user are the City of Paso Robles (City) and its subsidiary, Paso Robles Municipal Airport. The purpose of this appraisal assignment is to determine the fee simple value of the land and determine the market ground lease rate of the subject property. The function of the appraisal is to assist the City in the outlease of the subject property.

SCOPE OF WORK
The purpose of this appraisal assignment is to determine the fee simple market value of the land and the market ground lease of the subject property. The date of value is based on the inspection date, unless noted otherwise in the appraisal. The date of the report is the date the appraisal is transmitted to the client.

VALUATION / RESEARCH OVERVIEW
The following is an overview of the valuation process and research involved for the subject property and comparable leases. The valuation of the property involved an investigation and analysis of the neighborhood, as well as the entire regional area, for social, economic, governmental, and environmental forces and trends that affect or could influence property values. • The property was inspected on November 15, 2022, by Ross Campbell of Bender Rosenthal, Inc. • Research the area, community, and neighborhood to determine market influences/conditions. • Research of public records to verify information about the subject property and comparables to ensure they are factually accurate and that there are no terms or additional influences that affect price or value.
• Research zoning and general plan obtained from the City of Paso Robles Planning Departments and other department websites, as well as extensive research of the land market. • Review of applicable flood and seismic hazard areas from appropriate source data. • Review public records obtained from the various county governmental agencies including the Planning Department, Assessor’s Office, and Tax Collector’s Office. • A search of specific property transfers occurring during the past three years was conducted for the subject properties.
• Determine highest and best use of the property.
• Research comparable property leases, listings, and offers to lease involving grazing leases within the subject’s or competing market area.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 2
• Research comparable property sales, listings, and offers to lease involving properties like the subject property and within the subject’s or competing market areas. • Interview comparable property owners and/or brokers.
• Fred McGrew provided significant assistance in the preparation of this report including the collection of market and regional data in this report under the direct supervision of David Houghton.

REPORT TYPE
USPAP Standards Rule 2-2a require each written real property appraisal report to state the specific report type, either an Appraisal Report or a Restricted Appraisal Report. This appraisal is reported in an Appraisal Report format as defined by USPAP.

DEFINITIONS USED IN THE REPORT
Definition of an Appraisal
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 10. • The act or process of developing an opinion of value; an opinion of value. An appraisal must be numerically expressed as a specific amount, as a range of numbers, or as a relationship (e.g., not more than, more than, not less than, less than) to a specified amount. (SVP) Market Value
Source: Office of the Comptroller of the Currency. CFR Title 12, Part 34, Subpart C, § 34.42 Definitions The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

1. Buyer and seller are typically motivated;

2. Both parties are well informed or well advised, and acting in what they consider their own best interests;

3. A reasonable time is allowed for exposure in the open market;

4. Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and

5. The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 3
Market Rent
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 117 The most probable rent that a property should bring in a competitive and open market under all conditions requisite to a fair lease transaction, the lessee and lessor each acting prudently and knowledgeably, and assuming the rent is not affected by undue stimulus. Implicit in this definition is the execution of a lease as of a specified date under conditions whereby • Lessee and lessor are typically motivated;
• Both parties are well informed or well advised, and acting in what they consider their best interests; • Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and • The rent reflects specified terms and conditions typically found in that market, such as permitted uses, use restrictions, expense obligations, duration, concessions, rental adjustments and revaluations, renewal and purchase options, frequency of payments (annual, monthly, etc.), and tenant improvements (TIs).

Fee Simple Estate
Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition, P. 73 Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat.

Extraordinary Assumption
Source: Uniform Standards of Professional Appraisal Practice 2020-2021 Edition, P. 4 An assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions Hypothetical Condition
Source: Uniform Standards of Professional Appraisal Practice 2020-2021 Edition, P. 4 A condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results, but is used for the purpose of analysis.

Ground Lease.

Source: The Dictionary of Real Estate Appraisal, Appraisal Institute, 7th Edition P. 86 A lease that grants the right to use and occupy land. Improvements made by the ground lessee typically revert to the ground lessor at the end of the lease term.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 4

GENERAL ASSUMPTIONS AND LIMITING CONDITIONS
This appraisal report and the value estimates it contains are expressly subject to the following assumptions and/or limiting conditions.

1. Title to the property is marketable.

2. No survey of the property has been made by the appraisers and property lines as they appear on the ground are assumed to be correct.

3. Data, maps, and descriptive data furnished by the client or his/her representatives are accurate and correct.

4. No responsibility is assumed for matters of law or legal interpretation.

5. No conditions exist that would affect the use and value of the property, which are not discoverable through normal, diligent investigation.

6. The valuation is based on information from sources believed reliable, and that such information is correct and accurately reported.

7. The value estimate is made subject to the purpose, date, and definition of value.

8. The report is to be considered in its entirety and use of only a portion will invalidate the appraisal.

9. This appraisal was made on the premise that there are no encumbrances prohibiting utilization of the property under the appraiser's estimate of highest and best use.

10. Possession of this report or a copy does not carry with it the right of publication nor may it be used for any purpose by anyone other than the client without the previous written consent of Bender Rosenthal, Inc., and then only with proper qualifications.

11. Disclosure of the contents of this appraisal report is governed by the By-Laws and Regulations of the Appraisal Institute. No part of this narrative report may be reproduced by any means nor disseminated to the public in any way without the prior written consent of Bender Rosenthal, Inc.

12. Any person or entity who obtains or reads this report, or a copy, other than the client specified in this report, expressly assumes all risk of damages to themselves or third persons arising out of reliance on this report and waives the right to bring any action based on the appraisal, and neither the appraisers nor the appraisal firm shall have any liability to any such person or entity.

13. The appraiser shall not be required to give testimony or appear in court by reason of this appraisal with reference to the property described in this report unless prior arrangements have been made.

14. No responsibility is assumed for building permits, zone changes, engineering or any other services or duty connected with legally utilizing the subject property.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 5

15. The property appraised may or may not be subject to the Americans with Disabilities Act of 1990 (ADA). Title III of this act provides for penalties for discrimination in failing " to remove architectural barriers . . .in existing facilities [unless] an entity can demonstrate that the removal. is not readily achievable." Unless otherwise noted in this appraisal, it is assumed that the property appraised is not substantially impacted by this law.

16. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraisers. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of such substances as asbestos, ureaformaldehyde foam insulation, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired.

17. It is assumed that the property appraised is competently managed and marketed.

EXTRAORDINARY ASSUMPTIONS AND HYPOTHETICAL CONDITIONS
Note to Reader: The subject property is subject to the following extraordinary assumptions and/or hypothetical conditions, which might have affected the assignment results.

EXTRAORDINARY ASSUMPTIONS

1. A preliminary title report was not provided to the appraisers for review as of the date of value.

Further, a transfer document indicating the current ownership was not available in public records.

The appraisers therefore assume that A) title is held by the City of El Paso de Robles, a California municipal corporation, B) title is marketable (see Hypothetical Condition No. 1), and C) that no exceptions to title exist that adversely impact the subject’s value. If upon receipt of a title report and after review, it is determined an exception will impact the opinion of value, the appraisers reserve the right to revise the report as a new assignment.

HYPOTHETICAL CONDITIONS

1. Per FAA regulations, the City of Paso Robles is restricted from selling land within the municipal airport boundaries. For the purposes of this appraisal, the valuation is based on the hypothetical condition that title is marketable.

2. There is currently no legal access to the subject property. For the purposes of this appraisal, the valuation is based on the hypothetical condition that legal access can be established, with the caveat that legal access is not yet established.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 6

SAN LUIS OBISPO COUNTY REGIONAL OVERVIEW
Social, economic, governmental, and environmental forces influence property value since real estate is an immobile asset. In this section, an examination of these location factors provides the context for the valuation of the subject property. The property is located within the environs of the Paso Robles Municipal Airport, four miles northeast of downtown Paso Robles and in San Luis Obispo County.

San Luis Obispo County is located on the Central Coast of California, covering 3,299 square-miles of land.

As of the 2020 United States Census, the county had a population of 282,424 residents. The small size of the county's communities, scattered along the beaches, coastal hills, and mountains of the Santa Lucia range, provides a wide variety of coastal and inland hill ecologies to support fishing, agriculture, and tourist activities. California Polytechnic State University has almost 20,000 students. Tourism, especially for the wineries, is popular. Grapes and other agriculture products are an important part of the economy.

San Luis Obispo County is the third largest producer of wine in California, surpassed only by Sonoma and Napa counties. Strawberries are the largest agricultural crop in the county. A map of the subject in relation to the county is seen below.

REGIONAL MAP

SUBJECT
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 7

ACCESS AND TRANSPORTATION
San Luis Obispo County is served by U.S. Highway 101 and State Highways 1, 41, 46, and 58. U.S. Highway 101 is the primary access route in the county, and throughout most of the county is a multi-lane freeway.

The highway links the county to Los Angeles to the south and to San Jose and the San Francisco Bay Area to the north. The Pacific Coast Highway (State Highway 1) generally parallels Highway 101 following the coast, except where the two highways briefly merge between the City of San Luis Obispo and Pismo Beach.

State Highways 41 and 46 are east-west axis routes connecting the north county coastal region to Paso Robles and Atascadero and thence to Fresno and Bakersfield in the Central Valley. Another east-west route is Highway 58, which connects the City of San Luis Obispo to Bakersfield before terminating at Barstow, California, near the junction of Interstates 15 and 40.

As the Coast Starlight, Amtrak operates the Los Angeles to Seattle rail passenger service through the county, with stations in Paso Robles, City of San Luis Obispo, and Grover Beach.

San Luis Obispo County Regional Airport is located near the City of San Luis Obispo. Four passenger airlines serve the airport with non-stop flights to eight cities. Alaska Airlines has flights to Portland, Oregon, San Diego, and Seattle/Tacoma in Washington. American Airlines connects the county to Dallas/Fort Worth in Texas. Flights to Phoenix, Arizona are provided by American Eagle. United Express offers flights to Denver, Colorado, Los Angeles, and San Francisco.

Paso Robles Municipal Airport offers charter passenger services and is home to CalFire’s Air-Attack Base, which is used to fight wildfires in Kern, Monterey, and San Luis Obispo Counties.

CITIES / COMMUNITIES
The nearest major metropolitan areas to San Luis Obispo County are San Jose, approximately 145 miles north of the county, and Los Angeles, approximately 165 miles south, both connected to the county via Highway 101. Located in San Luis Obispo County are the incorporated cities of San Luis Obispo, the county seat, Arroyo Grande, Atascadero, Grover Beach, Morro Bay, Paso Robles, and Pismo Beach.

Unincorporated communities of 1,000 or more residents include Avila Beach, Blacklake, Callender, Cambria, Cayucos, Lake Nacimiento, Los Osos, Los Ranchos, Nipomo, Oceano, San Miguel, Santa Margarita, Shandon, Templeton, and Woodlands. Bordering counties include Monterey County, Kings County, Kern County, and Santa Barbara County.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 8

POPULATION
As of January 1, 2022, the California Department of Finance estimated the population of San Luis Obispo County as 280,721. While the county population increased 0.4% year-over-year, this is still over 1,700 fewer than the 2020 U.S. Census. With the exception of the City of San Luis Obispo which gained 0.2% year-over-year, the other incorporated cities in the county all lost between 1.1% and 1.6% of the 2021 population while the balance of the county gained 2.0%. A table summarizing the State and County populations is presented below.

POPULATION ESTIMATES –

CALIFORNIA AND SAN LUIS OBISPO COUNTY
State/County/City 1/1/2021 1/1/2022 Change
California 39,303,157 39,185,605 -0.3%
San Luis Obispo County 279,710 280,721 0.4%
Arroyo Grande 18,533 18,294 -1.3%
Atascadero 30,823 30,480 -1.1%
Grover Beach 12,879 12,707 -1.3%
Morro Bay 10,638 10,466 -1.6%
Paso Robles 31,659 31,176 -1.5%
Pismo Beach 8,095 7,981 -1.4%
San Luis Obispo 47,541 47,653 0.2%
Balance of County 119,542 121,964 2.0%
Source: California Department of Finance, Demographic Research.

UNEMPLOYMENT RATES
It is noted that the subject property is located within the San Luis Obispo-Paso Robles-Arroyo Grande Metropolitan Statistical Area (MSA), which encompasses San Luis Obispo County. The following chart presents the historical unemployment rate for the MSA since September 2020.

Source: California EDD.

The unemployment rate in the San Luis Obispo MSA was 2.7% in August 2022, up from a revised 2.5% in July 2022, and below the year-ago estimate of 5.2%. This compares with an unadjusted unemployment rate of 4.1% for California and 3.8% for the nation during the same period. As noted in the chart above, the MSA unemployment rate dropped to 2.1% in May 2022, the lowest rate observed over the past 30 plus years of available data. This follows the recent spike observed at the beginning of the COVID19 pandemic related lockdowns, when the County’s unemployment rate reached 14.6% in April 2020.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 9

EMPLOYMENT BY INDUSTRY
Source: Employment Development Department, September 2022.

As shown in the above pie chart, the largest industry in the region is Government at 17% of the total employment. The second largest employment industry sectors are Trade Transportation & Utilities and Leisure & Hospitality with 16%. Educational & Health Services (15%) and Professional & Business Services (10%) round-out the top five industry sectors.

Farm
4%
Mining, Logging, &
Construction
8%
Manufacturing
7%
Trade, Transporatation,
& Utilities
16%
Information
1%
Financial Activities
3%
Professional & Business
Services
10%
Educational & Health
Services
15%
Leisure & Hospitality
16%
Other Services
3%
Government
17%

SAN LUIS OBISPO COUNTY EMPLOYMENT BY INDUSTRY
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 10

MAJOR EMPLOYERS
As shown in the table presented below, the six largest employers in the county, each with between 1,000 and 4,999 employees, are distributed between the City of San Luis Obispo (3), Paso Robles (2), and Atascadero. Overall, government services (not including educational services) and health services each account for six of the major employers, while educational services accounts for three.

Employer Name Location Industry No. of Employees
Atascadero State Hospital Atascadero Hospitals 1,000-4,999 Avalara Paso Robles Computer Software 1,000-4,999
Cal Poly State University San Luis Obispo Schools-Universities & Colleges Academic 1,000-4,999 Glenair Inc Paso Robles Communications Consultants 1,000-4,999 Pacific Gas & Electric Co San Luis Obispo Electric Companies 1,000-4,999 San Luis Obispo County EMS San Luis Obispo Government Offices-County 1,000-4,999 AMI Sierra Vista Radiology San Luis Obispo Physicians & Surgeons 500-999 California Mid-State Fair Paso Robles Concert Venues 500-999 Cuesta College Paso Robles Junior-Community College-Tech Institutes 500-999 Medi-Cal Eligibility Info San Luis Obispo Government Offices-County 500-999 Mental Marketing San Luis Obispo Advertising-Agencies & Counselors 500-999 Sierra Vista Regional Med Ctr San Luis Obispo Hospitals 500-999 Trust RCM San Luis Obispo Billing Service 500-999
Arroyo Grande Community Hosp Arroyo Grande Hospitals 250-499 California State Parks San Simeon State Parks 250-499
French Hospital Medical Ctr San Luis Obispo Hospitals 250-499 Madonna Inn Bakery San Luis Obispo Resorts 250-499
Morro Bay Art Assn Morro Bay Art Galleries & Dealers 250-499 Mustang Waterpark Arroyo Grande Water Parks 250-499
Pismo State Beach Oceano State Parks 250-499
Ramirez Farm Labor Shandon Labor Contractors 250-499
San Luis Obispo County Ofc-Edu San Luis Obispo County Government-Education Programs 250-499 San Luis Obispo Sheriff's Dept San Luis Obispo Sheriff 250-499 Social Services Dept San Luis Obispo Government Offices-County 250-499 Twin Cities Community Hospital Templeton Hospitals 250-499

INFLATION
Beginning in 2021, high inflation returned to the nation for the first time in four decades, reaching 8.3% for the 12 months ended August 2022 after rising 8.5% previously, according to U.S. Labor Department data published Sept. 13, 2022. This phenomenon has been attributed to a combination of a multitude of factors, most significantly the historically low unemployment rate (where the number of job openings atypically exceeds that of the unemployed workers), international supply chain breakdowns resulting from the COVID-19 pandemic, and government bailouts during the early stages of the pandemic increasing consumer demand that outpaced the already weakened supply chain. The chart presented on the following page displays annual US inflation rates for calendar years from 2012 to 2022.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 11
USInflationCalculator.com, September 13, 2022
*The latest inflation data (12-month based) is always displayed in the chart’s final column.

On September 21, 2022, the Federal Reserve raised its benchmark interest rate by 75-basis points for the for third time this year in its fight against a 40-year high in inflation. The preceding 75-bais point hikes were announce in June and July, respectively. This follows a 50-basis point increase on May 5, 2022, and a 25-basis point increase on March 16, 2022.

It’s easy to forget that the Fed was holding the federal funds rate at around zero as recently as the first quarter of 2022. The Fed was also still buying billions of dollars of bonds every month to stimulate the economy. All despite 40-year highs in various measures of U.S. inflation.

CONCLUSION
It is apparent that San Luis Obispo County has been recovering from the recent pandemic. Further, a rebound in the housing markets has helped the local economy as well. Despite expectations of a mild recession looming in the coming months, driven by the Federal Reserve raising interest rates to fight inflation, the general consensus in the marketplace is that the County will continue to remain stable over the course of the next year, with slow growth moving forward.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 12

NEIGHBORHOOD DESCRIPTION

PASO ROBLES
With a State estimated population of 31,176 as of January 2022, Paso Robles has a median household income of $78,415, as compiled by the Site-To-Do-Business (STDB). The city’s median household income is projected to increase by 23% over the next five years. STDB reports the median home value in Paso Robles is $577,525 as of 2022. This is also expected to increase over the next five years.

PASO ROBLES MUNICIPAL AIRPORT
The subject is located in the Paso Robles Municipal Airport, a contiguous section of the incorporated City of Paso Robles. The airport is approximately 4 miles northeast of downtown Paso Robles. A map of the airport and its environs is presented below.

NEIGHBORHOOD MAP

SUBJECT
Vineyards
Vineyards
Industrial
Rural Residential
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 13
The area around the Paso Robles Airport, known as Airport Road Industrial Park, is home to aviation maintenance providers and facilities, as well as manufacturers and other related businesses. Under the city's direction, sections of the industrial park have been developed with utilities and infrastructure improvements, in addition to aircraft hangar and aviation service facilities being constructed. Currently, the industrial park offers over 500,000 square feet of industrial building space in operation, housing approximately 50 individual businesses, and providing over 700 jobs in the community. The number of aircraft based at the airport has grown from 55 at the time of city acquisition in 1973, to over 200 today.

The airport is home to a CalFire Air Attack Base, providing Kern, Monterey, and San Luis Obispo Counties with wildfire air-support.

Access to central Paso Robles from the airport is via Airport Road and Highway 46.

PASO ROBLES GROUNDWATER BASIN
The unincorporated agriculture area north and west of the airport lies within the Paso Robles Groundwater Basin and is dedicated to either wine grapes or cattle grazing, depending on available irrigation water supplies. However, further vineyard development is limited due to increasingly restrictive regulations tied to sustainable groundwater management. In August 2022, Governor Gavin Newsom ordered all new wells drilled over threatened groundwater basins first receive approvals from the presiding Groundwater Sustainability Agency.

NEIGHBORHOOD CONCLUSION
Overall, the neighborhood is largely rural and is primarily dominated by the airport, which offers service commercial and industrial zoned lots. Although surrounded by rural residential and agricultural uses, median incomes and home prices are expected to increase over the next five years. Generally, the land values within the neighborhood are stable.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 14

MARKET OVERVIEWS
The subject property is zoned for Airport Planned Development, which allows for both agriculture and industrial uses. It is therefore appropriate to analyze both the agriculture and industrial markets in San Luis Obispo County.

AGRICULTURE OVERVIEW
For the agriculture market overview, pertinent information was obtained from the 2022 Trends® in Agriculture Land & Lease Values(Ag Trends) published by the California Chapter, American Society of Farm Managers & Rural Appraisers and from annual crop reports published by the county.

AG TRENDS

OVERVIEW
Ag Trends places San Luis Obispo County in Region 6 of California, the Central Coast. This region also includes Alameda, Monterey, San Benito, San Mateo, Santa Barbara, Santa Clara, Santa Cruz, and Ventura Counties.

WINE GRAPES
The San Luis Obispo County market is broken down into three distinct growing areas (see following sections), which impacts the underlying land and vineyard values, along with grape/bottle prices. Land suitable for vineyards in San Luis Obispo County has limited competition from vegetable and berry growers. Vineyard values mostly range between $25,000 (for “declining” vineyards) and $75,000 per net vine acre, while plantable land values range between $20,000 and $60,000 per acre. West Paso Robles in recent years, including 2021, has supported values above the typical range for the County (see next section). The middle to upper end of the range is mostly captured by premium growing areas (above average grape pricing), such as West Paso and the Edna Valley/Arroyo Grande Valley. The middle to lower end of the range is mostly captured by the East Paso, Shandon, San Miguel, and Creston areas.

West Paso/Templeton
Starting at the north end of the County, vineyards located west of Paso Robles/Templeton and Highway 101 set the upper end of the range, with vineyards selling for approximately $55,000 (older/interim) to more than $75,000 per net vine acre. In 2021 plantable land values stepped up, with a few sales between $50,000 and $55,000 per acre, and two commercial size plantable land sites selling at and slightly above $70,000 per acre. Buyers setting these new highs for plantable land are local wineries looking to secure premium vineyard sites that will support their growing wine programs, with bottle pricing at or above $40 /bottle.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 15
It is important to note that land and vineyard values in this area are influenced by above average bottle and grape pricing, smaller parcel sizes, rural estate and/or winery site appeal. Many of the sales in this area are purchased by lifestyle buyers looking to purchase a home or winery site with a vineyard. With the smaller parcel sizes and significant site appeal, it is common practice to allocate a site component in addition to the vineyard and plantable land value. It is important to hire a local agriculture appraiser to better understand the nuances and complexities impacting “westside” vineyard properties.

East Paso/Creston/Shandon/San Miguel
Staying at the north end of the county and moving east of Highway 101, where our subject property is located, is the Paso Robles Ground Water Basin, which now restricts new plantings and additional water usage without obtaining an offset as outlined by the County. These restrictions have been extended to 2024 and have resulted in stable demand and values for vested, plantable land, with values mostly falling near $20,000 per acre. Plantable land sales that require an offset are a small component of the overall market and, because of this, are not presented in the table. Plantable land sales with offset requirements often support values that are at least half that of plantable land sales with no offset requirements. In the past couple of years, the trend continued of older vineyards being purchased with plans for redevelopment. These sales can be generalized as having grape pricing at or below county averages, with historical production at or below four tons per acre, and in some cases with only break-even production (grape sales offset by farming costs). These less profitable/interim vineyards support values near plantable land. There was one commercial vineyard sale that closed at the beginning of 2021, which included an older/interim vineyard (value near plantable land).

The next category of vineyard sales for this area included mid-life or slightly older vineyards with average production levels and grape prices indicating values mostly between $30,000 and $40,000 per net vine acre. Vineyard values beyond $40,000 per net vine acre are mostly young to mid-life, with production levels at or above five tons per acre, and grape pricing near or above county average. In 2021 there were no commercial vineyard sales that fell into the last two categories. The most active part of the market in this area featured improved rural estate sites that included some vineyards. Vineyard allocations for these rural estate sales mostly fell between $25,000 and $40,000 per acre.

A map depicting the Paso Robles Ground Water Basin is presented on the following page.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 16

PASO ROBLES GROUND WATER BASIN MAP
Edna Valley
This area is the most established southern vineyard market in San Lui Obispo County and has some similarities to West Paso/Templeton, in that values are influenced by above average grape and bottle pricing (Pinot Noir and Chardonnay), smaller parcel sizes, and rural estate and/or winery site appeal.

Similar to the analysis of West Paso/Templeton, site/entitlement values are commonly set aside for premier rural estate and winery locations. Market activity has historically been limited in this small valley and 2021 was no exception. Values historically have been at the middle to upper end of the range for San Luis Obispo County and more in line with the cool climate growing areas of Santa Barbara County and Monterey County. In 2021 there were no commercial size plantable land or vineyard sales. Plantable land and interim vineyard value in Edna Valley typically range between $35,000 and $55,000 per acre, while modern/viable vineyards mostly fall between $50,000 and $70,000 per acre.

SUBJECT
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 17
The following table summarizes plantable land and vineyard value ranges in San Luis Obispo and Santa Barbara Counties.

VALUES: LAND AND LEASE
San Luis Obispo & Santa Barbara Counties

LAND USE VALUE PER ACRE MARKET DEMAND MARKET ACTIVITY VALUE TREND Plantable (Wine Grapes) $20,000 - $70,000 Moderate Moderate Increasing Wine Grapes $25,000 - $75,000 Moderate Moderate-Strong Stable Source 2022 Ag Trends

SAN LUIS OBISPO COUNTY CROP REPORT
2021 marks a record year for the overall crop value in the county which is estimated to be $1,081,952,000.

This estimate puts the 2021 crop production value at 10.6% above that of 2020. Fruit and nut crops, anchored by strong strawberry, wine grape, and avocado values ended the year at $713,904,000, representing an 18.3% increase over 2020. Through a combination of increased acreage and prices, strawberries remained the number one crop in the county with a value of $319,901,000. Wine grapes and avocados rebounded significantly with respective increases of $63,279,000 and $10,588,000 over 2020 values.

Despite several challenges including labor shortages, drought conditions, and highly variable pricing, vegetable crops remained relatively stable in value in 2021. Vegetable crops represent $233,548,000 of the county’s overall production value. As in the past, broccoli is the highest value vegetable produced in the county and remains our number one international export.

Ongoing drought continues to impact our local animal industry. Overall values fell by $3,401,000 as animal weights dropped due to the lack of natural forage. Cattle prices were up 4.5% at $139/Cwt (hundredweight) and the number of head sold was relatively stable on the year. Also impacted by ongoing drought conditions were field crops ending the year with a value 26% lower than calendar year 2020.

Many field crops rely entirely on annual rainfall and with very little precipitation on the year, yields were very low, and many acres were left unharvested as the cost to harvest exceeded the value of the crop.

The value of nursery products remained relatively stable when compared to 2020. The markets for nursery products are dynamic, and our local producers have become quite adept at anticipating changing consumer demands and preparing to meet those demands each year. Nursery products ended the year with a value of $76,503,000 or 0.8% over that of 2020. A table summarizing the top ten commodities for 2021 is presented on the following page.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 18
Crop 2021 Value Percent of County
Total Value
Strawberries $319,901,000 29.57%
Wine Grapes $281,517,000 26.02%
Avocados $57,757,000 5.34%
Broccoli $46,524,000 4.30%
Cattle & Calves $39,754,000 3.67%
Vegetable Transplants $32,150,000 2.97%
Cauliflower $24,272,000 2.24%
Head Lettuce $21,433,000 1.98%
Lemons $18,583,000 1.72%
Cut Flowers $18,382,000 1.70%
Top Ten Total $860,273,000 79.51%
Source: 2021 San Luis Obispo County Crop Report
As shown in the above table, two fruit crops, strawberries and wine grapes account for nearly 55.6% of the county’s overall production value. However, over the previous decade (2012 – 2021), the values for wine grapes have been more volatile than strawberries, as shown in the chart presented below.

Source: 2021 San Luis Obispo County Crop Report
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

SAN LUIS OBISPO COUNTY

STRAWBERRY & WINE GRAPE CROPS BY VALUE
2012 - 2021
Strawberries
Wine Grapes
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 19

WINE GRAPES
Because the highest and best use for the subject property is vineyard adaptable land, a closer look at wine grapes in San Luis Obispo County is warranted. The following table summarizes the most common wine grapes varietals in the county.
2021 Wine Grape Varietals
Grape Crop Bearing
Acres
Yield/Acre
(Tons)
Total
Production
Value per
Ton
Total Gross
Value
Chardonnay 2,658 5.141 13,665 $1,559 $21,303,000
Sauvignon Blanc 967 9.999 9,669 $1,558 $15,064,000
White Wine (Other) 1,531 4.000 6,124 $2,111 $12,928,000 Cabernet Sauvignon 19,344 4.205 81,342 $1,624 $132,099,000 Merlot 3,122 3.858 12,045 $1,446 $17,417,000
Pinot Noir 2,124 3.340 7,094 $2,210 $15,678,000
Syrah 2,575 3.534 9,100 $2,161 $19,665,000
Zinfandel 2,050 2.719 5,574 $1,736 $9,676,000
Red Wine (Other) 6,931 3.154 21,860 $1,724 $37,687,000
Total 41,302 4.031 166,473 $1,691 $281,517,000
Source: 2021 San Luis Obispo County Crop Report

PASO ROBLES ESTRELLA DISTRICT
The Paso Robles Estella District sub-appellation is one of eleven district that comprise the Paso Robles American Viticultural Area (AVA). At approximately 66,800 acres, this area is largely valley floor type topography and floodplain to the Estrella River. Although it’s mostly a dry riverbed, the Estrella River forms near the town of Shandon and flows west-northwest to the Salinas River. Elevations in the Estrella District range between 745 to 1,800 feet above sea level through a series of terraces and foothills. Vineyards are planted on flat surfaces and various slope angles and aspects. The warm summer days are cooled by modest maritime sea breezes through the Templeton Gap effect, as well as downslope winds from the eastern ranges, which is reflected by early morning fog in the summer. The soils in the Estrella are predominantly alluvial in nature, ranging from fine sandy loams to the more substantial clay loam. The terroir is quite perfect for the cultivation of premium wine grapes, warm days that do lead to cool nights, moderate soil rooting depths control vigor in vines, and tempered water stress produce complex fruit flavors. Red varieties that do well in the Estrella include Cabernet Sauvignon, Syrah, Merlot, Petite Syrah, and other Bordeaux varieties. White varieties seen to be doing well include Sauvignon Blanc, Viognier, and Chardonnay. A map of the eleven districts comprising the Paso Robles AVA is presented on the following page.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 20

PASO ROBLES AVA MAP

AGRICULTURE OVERVIEW CONCLUSION
Without surface water rights or rights to draw groundwater, land values in the vicinity of Paso Robles range from $6,000 to $10,000 per acre. This is a fraction of the values commanded by land with water rights, where the low end of the range is $20,000 per acre. The upper end of the range for vineyard adaptable land, $70,000 per acre, is found in the Paso Robles hills west of Highway 101, and in the south county’s Edna Valley.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 21

INDUSTRIAL MARKET OVERVIEW
Given the industrial nature of the subject property, a market overview of the industrial market in San Luis Obispo County is appropriate. Pertinent information was obtained from CoStar, a leading commercial real estate company and from market participants.

COSTAR INDUSTRIAL REPORT

OVERVIEW
Industrial rents in the San Luis Obispo Market were rising at a 7.3% annual rate during the fourth quarter of 2022 and have posted an average annual gain of 5.8% over the past three years. In addition to 79,000 SF that has delivered over the past three years (a cumulative inventory expansion of 0.9%), there is 10,000 SF currently underway, representing a fractional expansion of the existing inventory. Vacancies were basically in line with the 10-year average as of the fourth quarter 2022 and were little changed over the past four quarters.

Employment in the metro was recently increasing at an annual rate of 4.7%, or a gain of about 5,500 jobs.

While a positive result, this does represent the weakest rate of job creation in the past twelve months, which at one point was as high as 7.3%.

Source: CoStar’s San Luis Obispo Industrial Report.

VACANCY AND ABSORPTION
The vacancy rate for the county’s Industrial market has declined since the fourth quarter of 2016, when it was approximately 5.25%. It has dropped as low as 1.5% in the first quarter of 2022 but is currently sitting at 2.5%. This compares favorably to the national vacancy rate, approximately 4.0%.

Third quarter 2022 deliveries of nearly 40,000 square-feet pushed the absorption to a negative 30,000± square-feet. As shown in the “Key Indicators” table on the preceding page, current quarter absorption and delivery figures haven’t been complied yet, but over 10,000 square-feet is currently under construction.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 22
Source: CoStar’s San Luis Obispo Industrial Report.

ASKING RENTS
Since the fourth quarter 2016, asking rents in the county have steadily increased and the average monthly asking rent is currently at $1.30 per square-foot. The pace of rent increases is expected to remain strong through 2023 before leveling off somewhat from 2024 through 2026.

Source: CoStar’s San Luis Obispo Industrial Report.

CONSTRUCTION AND INVENTORY
The third quarter 2022 saw one delivery of new industrial space consisting of 39,000 square-feet, the first in nearly two years. A more modest delivery of approximately 10,000 square-feet is expected in November 2022. Both projects are located in the South SLO submarket, which includes the City of San Luis Obispo.

However, CoStar has not recognized the construction of seven buildings totaling over 420,000 square-feet in the Paso Commons development in Paso Robles (North 101 Corridor submarket). According to the leasing broker, one building with 44,626 square-feet has been delivered in the third quarter 2022, with the remainder to be delivered in December 2022.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 23
Source: CoStar’s San Luis Obispo Industrial Report.

Industrial inventory currently sits at 627 buildings county-wide, comprising of a total of 9,154,000 squarefeet. The South SLO submarket has the largest share of buildings at 42.5%, followed by the North 101 Corridor, which includes Paso Robles, at 38.5%.

SALES
The San Luis Obispo industrial market contains one of the smaller inventories in the nation. In turn, the market saw limited investment relative to its peers in the past year, with 19 transactions. That was a drop in the sales count relative to the five-year average in the metro. Annual sales volume has averaged $33.7 million over the past five years, and the 12-month high in investment volume hit $57.0 million over that stretch. In the past 12 months specifically, $55.8 million worth of industrial assets sold. Logistics facilities drove recent sales volume, accounting for $49.0 million in confirmed transactions.

The market price, which is based on the price movement of every industrial property in each sector in the metro and informed by actual transactions, now sits at $213/SF. That figure is up over this time last year, and the price itself sits way above the average pricing for the overall country. As depicted in the chart presented on the following page, the5.2% market cap rate is within a few basis points of where it was 12 months ago, but the cap rate is structurally lower here than those found across the United States.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 24
Source: CoStar’s San Luis Obispo Industrial Report.

NORTH 101 CORRIDOR SUBMARKET
Paso Robles is included in the North 101 Corridor submarket, which ranks last out of the seven county submarkets with the lowest current average monthly asking rent of $1.10 per square-foot; but it ranks first for the lowest vacancy rate, currently at 1.8%, and absorption of 3,643 square-feet in the third quarter 2022. Inventory sits at 195 buildings, representing 3,523,000 square-feet.

Current asking rates pulled from Loopnet.com show a range between $1.15 to $1.40 per square-foot. As noted below, new construction expected to be delivered late 2023 is listed at $1.20 per square-foot.

Market participants point to two
developments currently under construction:
the Paso Commons in Paso Robles and the Del
Rio Market Place in Atascadero. By the end of
the fourth quarter 2022, the seven-building
development of Paso Commons is expected to
deliver an additional 375,000 square-feet of
space to the 44,000 square-feet of space
delivered in third quarter 2022, raising the
submarket inventory to 202 buildings totaling
approximately 3,943,000 square-feet.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 25
The ten building Del Rio Market Place at the
signalized intersection of El Camino Real and
Del Rio Road in Atascadero is expected to
deliver two industrial buildings with over
50,000 square-feet in September 2023. The
eight other buildings within this project are
dedicated to office and retail uses. The NNN
monthly asking rate for the industrial space is
currently $1.20 per square-foot.

INDUSTRIAL MARKET OVERVIEW CONCLUSION
While the industrial market remained resilient throughout the COVID-19 pandemic, the post pandemic outlook is tempered by the highest inflation in four decades, which has resulted in higher interest rates set by the Federal Reserve to combat the high inflation. However, market participants noted that rising interest rates haven’t affected land values yet as land sales aren’t conventionally financed.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 26

PROPERTY DESCRIPTION

GENERAL
The subject property is 22.08± acre portion of San Luis Obispo County Assessor’s Parcel Number (APN) 025-450-001, which encompasses the nearly 850-acre Paso Robles Municipal Airport. Specifically, the subject property is located near the airport’s northwestern corner, approximately 485-feet east of Airport Road and 360-feet north of the unnamed gravel road connecting Airport Road to the Cal-Fire Air Attack Base.

EXISTING SITE ATTRIBUTES
Assessor’s Parcel Numbers 025-450-001 (portion)
Owner The City of El Paso de Robles, a California municipal corporation.

Sales History No sales transactions have occurred within the last ten years. However, a ground lease was signed with
SunE Sunset Holdings1, LLC on December 29, 2015,
and amended February 7, 2017, February 7, 2018,
and October 9, 2020. The lease has 18 years
remaining on the term with payments based on the
amount of power generated by the proposed solar
facility once construction is complete. The specific
details of these payments were not provided to the
appraiser. Considering the appraisal assignment was
to determine the market lease rate regardless of the
current lease arrangement the details of the current
payment schedule are not required.

Zoning AP PD, Airport Planned Development, City of Paso Robles
Within the Airport Zoning District, permitted uses
include agriculture, food processing and service,
automotive sales and services, commercial offices,
commercial retail, limited health care facilities,
wholesale services, warehousing, and various
manufacturing uses.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 27
General Plan Designation BP, Business Park, City of Paso Robles The BP designation is intended to provide areas for
clean and attractive businesses and industries in
which all activities are conducted indoors (some
limited outdoor storage and/or activities may be
permitted via approval of a conditional use permit
and if completely screened). Where appropriate,
compatible convenience and highway commercial
land uses may be located in the Business Park
category.

Surrounding Land Use Surrounding uses outside the confines of the airport consist of predominantly vineyards and grazing land.

Size 22.08± acres, or 961,882± square-feet
Source: Appraisal Exhibit provided by the client.

Shape Nearly square.

Frontage / Access The subject 22.08± acres does not have direct road frontage or access. It is situated 450-feet east of
Airport Road (paved) and an estimated 350-feet
north of the gravel road linking Airport Road to the
Cal-Fire Air Attack Base.

Topography Level to mild slopes.

Water Sources None. Further, per the county’s Groundwater Sustainability Plan (GSP), property owners cannot
irrigate commercial ag-properties with groundwater
unless the property either already holds the rights
with an existing agriculture-rated well or has
obtained rights through offsets purchased from
other properties within the Paso Robles
Groundwater Basin, and the subject has neither.

Other Utilities Electric power is available along the gravel road leading to the Cal-Fire Air Attack Base, 350-feet to
the south.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 28
Flood Information The property is located in Flood Zone X (unshaded), an area of minimal flood hazard, as designated on
FEMA Map 06079C0392G dated November 16, 2012.

Soils The subject’s overall irrigated capability rating is 3.3, based on an average of the class 3 and 4 soils
presented below.

Irrigated Soils
Soil Name Rating Percent
Arbuckle-San Ysidro
complex 3 66.8%
Arbuckle-Positas complex 4 33.2%
Class 3 soils have severe limitations that reduce the
choice of plants or that require special conservation
practices, or both. Class 4 soils have very severe
limitations that reduce the choice of plants or that
require very careful management, or both.

Seismic Information The subject property is not within a Fault-Rupture Hazard Zone (formerly an Alquist-Priolo Special
Studies Zone), according to Special Publication 42,
"Fault-Rupture Hazard Zones in California",
published by the California Department of
Conservation, Division of Mines and Geology, revised
2007. No active faults are located on or in the
proximity of the property. However, strong
earthquakes generated along any of the active
California faults may affect the site depending on the
characteristics of the earthquake and the location of
the epicenter. In general, the effects should be
confined to shaking and/or acceleration (shock
waves) and potential damage to structures should be
minimized by employing adequate design and
construction procedures.

Because San Luis Obispo County, and most of the
State of California, is a seismically active region, the potential for earthquake-induced hazards must be
acknowledged. However, the history of past
earthquake activity does not indicate that San Luis
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 29
Obispo County is a particularly hazardous area.

Current engineering design, and construction
practices, such as the Uniform Building Code,
provides the opportunity to reduce earthquake
related hazards.

Parcel Improvements The perimeter of the larger parcel is secured by a chain link fence topped with three-strand barbed
wire.

Lease Status The amended ground lease with SunE Sunset
Holdings1, LLC stipulates that no rent is due to the
Lessor until the Lessee installs the agreed upon solar
power array.

Cultural, Recreational, and Historic Significance None known to exist Property Taxes As the property is owned by a municipal government entity, the site is not subject to property taxes.

OVERALL COMMENTS
The subject property consists of 22.08± acres of fenced, non-irrigated land zoned for agriculture/industrial. The property’s positive attributes include its location in the Paso Robles Estrella District AVA, Flood Zone X, soil ratings, and level to mild slopes. However, its negative factors are electricity is 300-feet away, no water sources, and no direct road access or frontage. Additionally, the site has no supporting infrastructure needed for industrial development.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 30

HIGHEST AND BEST USE ANALYSIS
Highest and best use may be defined as the reasonably probable use of property that results in the highest value.

There are four criteria used in the highest and best use analysis process. These are:

1. Legally Permissible Use
What uses are permitted legally under existing zoning, building codes, historic district controls, environmental regulations, deed (private) restrictions, and long-term lease provisions on the site in question?

2. Physically Possible Use
What uses of the site are physically possible, given its size, shape, area, terrain, soils composition, accessibility, assembly potential, and risk potential from natural disasters?

3. Financially Feasible Use
Which possible and permissible uses will produce a positive net return to the owner of the property?

4. Maximally Productive Use
Among the feasible uses, which use will produce the highest residual land value consistent with the rate of return warranted by the market for that use? Since improved properties sometimes do not, in fact, contain the improvements that would generate the greatest return to the land, the highest and best use of the land as if it were vacant, as well as the highest and best use of the property as it is currently improved, normally are considered. In extreme cases, this analysis will call into question whether the existing improvements should be preserved. Usually, however, the analysis shows that if a property is already improved, the continuing use of the existing improvements yields more total return to the land than does the razing of the improvements in favor of alternative uses.

Given that the subject property is vacant land, only the highest and best use as vacant is relevant in the analysis.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 31

HIGHEST AND BEST USE, AS VACANT

LEGALLY PERMISSIBLE USES
In accordance with the definition of highest and best use, it is appropriate to analyze the subject property as though vacant as it relates to legal permissibility, physical possibility, financial feasibility and maximum productivity. Possible uses are constrained by legal restrictions on the property both private and public.

As previously discussed, the subject is zoned for Airport, Planned Development, and the General Plan designation is Business Park.

Overall, the legally permissible uses cover a variety of uses, including agriculture, food processing and service, automotive sales and services, commercial offices, commercial retail, limited health care facilities, wholesale services, warehousing, and various manufacturing uses, including electric power generation from solar panels.

PHYSICALLY POSSIBLE USES
The size, topography, and location of the subject are important factors in determining the use of the property. The size of the site can have a significant effect on the type of development that is possible and on the economies of scale. While the 22.08± acre size of the subject is adequate for commercial agriculture, the lack of paved road access and viable water sources limits the desirability. Further, the site lacks the municipal utilities and infrastructure required for food processing and service, automotive sales and services, commercial offices, commercial retail, limited health care facilities, wholesale services, warehousing, and various manufacturing uses.

Although the nearest electric substations are several miles away on the east side of San Miguel or in central Paso Robles, the subject has a signed ground lease where the lessee holds the option to install a solar power array. Therefore, the remaining physically possible use is limited to non-irrigated agriculture uses or electric power generation from a solar array.

FINANCIALLY FEASIBLE / MAXIMALLY PRODUCTIVE USES
The proposed property improvement must be able to deliver an income return that generates the market value sufficient to pay for the developmental costs, the risks involved, and profit appropriate for the type of development.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 32

AGRICULTURAL USE
As noted previously, the lack of irrigation water limits the potential for any agricultural crops. Offsets to obtain groundwater withdrawal rights are in concept available on the open market. However, the reality is that no one within the Paso Robles Groundwater Basin is willing to sell these rights. Further, if these rights should be made available, the costs are expected to be prohibitive. Further, dry farming and/or grazing will not produce the highest returns currently available from development to a solar power generation site.

SOLAR POWER GENERATION
Another physically possible and legally permissible use is the generation of electricity from solar panels.

Since 2018, the State of California requires that 50% of California's electricity to be powered by renewable resources by 2025, 60% by 2030, while calling for a "bold path" toward 100% zero-carbon electricity by 2045. ("Zero-carbon" sources include nuclear power, which is not renewable.). Solar power generation is expected to have a large role in the State as a leading renewable resource and will generate income streams higher than those typically seen for dry farming or grazing uses. However, given that solar panels may be placed on nearly any level to mildly sloping land, solar power developer’s look for land that typically has lower maximally productive uses, such as desert land, open space, or non-irrigated agriculture land.

Considering these factors, the most likely financially feasible and maximally productive use of the subject is for electric power generation from solar panels using land more typically dedicated to other uses such as desert land, open space, or non-irrigated agriculture land that would otherwise be used for rural residential development.

HIGHEST AND BEST USE CONCLUSION
Considering all the preceding factors, the highest and best use of the properties is for electric power generation from solar panels. However, these may be placed on any level to mildly sloping land, such as desert land, open space, or non-irrigated agriculture land.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 33

VALUATION

VALUATION METHOD AND CONSIDERATIONS
The opinion of value will be developed in accordance with accepted valuation principles, consistent with California eminent domain law (Code of Civil Procedure 1230.010). Every effort has been made to conform to The Uniform Relocation Assistance and Real Property Acquisition Policies Act, 1970 as amended; the Uniform Standards of Professional Practice (USPAP) of the Appraisal foundation; and Standards of Professional Practice of the Appraisal Institute, which fully incorporate the Uniform Standards of Professional Practice (USPAP).

The three recognized approaches to value are the Sales Comparison Approach, the Income Approach and the Cost Approach. We have utilized the Sales Comparison Approach to develop the opinion of the fair market value for the larger parcel land and the remainder parcel. The Sales Comparison Approach compares similar properties that have recently sold in the market area to the larger parcel and is usually the preferred method of valuation.

The initial stages of the appraisal process include the investigation, organization, and analysis of relevant market data and other information that relates to the value of the larger parcel. By searching public records and interviewing buyers, sellers, real estate agents, and others, we have found data pertaining to sales of properties reasonably comparable to the subject parcel. The comparable sales are compared to the subject and analyzed based on the appraiser's knowledge of market behavior, in order to derive an indication of fair market value. All sale properties were compared based on a price per square foot value, consistent with the market.

SALES COMPARISON APPROACH
The property appraised consists of 22.08± acre of vacant non-irrigated agriculture land suitable for development to a solar power generation site. Because solar generation developers currently do not purchase existing solar power generation sites, non-irrigated agriculture land sales analyzed. Effort was made to find sales within close proximity to the larger parcel with similar qualities and characteristics. The following market transactions were considered in this analysis and are concluded the best comparable sales available for analysis in the market. A table summarizing comparable agriculture land sales is presented on the following page to develop an opinion of the market value of the subject site as vacant.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 34

COMPARABLE LAND SALES SUMMARY TABLE AND MAP
Sale No.

BRI No.

Location
APN(s)
Grantor
Grantee
Sale Date
Doc. No.

Sale Price
Price /Ac
Size:

Acres
Water
Source
Soils
Other
Utilities
S-1
7038
W/s Jardine Road
S/o Estrella Road
Paso Robles, CA
APN: 015-015-015
David M Renton
Phillip & Michelle
Cravens
4/15/2022
016752
$450,000
$10,045

44.80 None

3.4 Power at
Road (Adj)
S-2
7037
W/s Estrella Road
& Jardine Road
Paso Robles, CA
APNs: 015-015-014 & -027
David M Renton
Matthew & Nicole Marie
Steinfelt and Ashley
Danielle Millan
7/28/2021
053139
$400,000
$8,715

45.90 None

3.4 Power at
Road (Adj)
S-3
7036
S/s Dry Creek Road
E/o Aerotech Center Way
Paso Robles, CA
APN: 025-436-037
Barbara Dusi Vanderpool
McFarland Land
Company
3/5/2021
017336
$500,000
$6,068

82.40 Dom. Well
&
Reservoir

5.7 Power &
Sewer at
Road (Adj)
S-4
7067
5175 Airport Road
Paso Robles, CA
APN: 025-434-002
Raymond Jr. & Nancy
Dodd Living Trust
Daou Vineyards LLC
6/19/2019
023487
$2,325,000
$119,845

19.40 Ag. Well

3.0 Power &
Septic

SUBJECT

22.08± Acre Protion of
Paso Robles, CA
APN: 025-450-001
Appraisal --- --- 22.08
None

3.3 Power at
Road
(350-ft)
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 35

COMPARABLE LAND SALES DISCUSSION
This analysis identifies the similarities and differences between the larger parcel and comparable properties. The primary elements of comparison include property rights, financing terms, conditions of sale (motivation), market conditions (sale date), and physical characteristics (e.g., zoning, utilities, soil quality, site improvements, location, access, etc.). The sales selected for comparison are considered the best available.

The market conditions for the following sales span from June 2020 through April 2022, generally before the interest rate hikes by the Federal Reserve. However, land sales are not typically financed (nor were any sales within the dataset presented) and rising interest rates have not yet impacted the land market.

Comparable Land Sale 1
This sale is 44.8± acres of non-irrigated agricultural land located on the westside of Jardine Road, south of Estrella Road in rural San Luis Obispo County approximately 7.5-miles northeast of central Paso Robles, California. Escrow closed April 15, 2022, for $450,000, or $10,045 per acre, in an all-cash transaction. The listing brokersaid there were no atypical sale conditions. The property has historically been used for dry grazing, as no well had been drilled and the property has no surface water rights. Per the Groundwater Sustainability Plan (GSP), this property has no groundwater rights and these rights haven’t been obtained through offsets. The buyers intend to build a residence, for which a domestic well would be permitted under current GSP regulations. Access is via a paved county road, and electric power is available at the road. The irrigated soils consist of 65% class 3 and 35% class 4, for an overall soil rating of

3.4. The San Luis Obispo County Land Use designation is AG, Agriculture. The shape is rectangular, and the topography is mildly sloped. Per FEMA, the property is in Flood Zone X, an area of minimal flood hazard.

This comparable has several similarities with the subject: it is mildly sloping non-irrigated agriculture land in the same AVA and flood zone, with nearly identical soil ratings. A negative attribute is the larger size, more than double that of the subject, which is indicative of a lower unit value. However, this is outweighed by the direct paved road access and proximity to electric power. Overall, this sale indicates a unit value less than $10,045 per acre for the subject.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 36
Comparable Land Sale 2
This sale is 45.9± acres of non-irrigated
agricultural land located on the westside of
Estrella and Jardine Roads in rural San Luis Obispo
County approximately 7.5-miles northeast of
central Paso Robles, California. Escrow closed July
28, 2021, for $400,000, or $8,715 per acre, in an
all-cash transaction. The listing broker said there
were no atypical sale conditions. The property has
historically been used for dry grazing, as no well
had been drilled and the property has no surface
water rights. Per the Groundwater Sustainability
Plan (GSP), this property has no groundwater
rights and these rights haven’t been obtained through offsets. The buyers intend to build a residence, for which a domestic well would be permitted under current GSP regulations. Access is via a paved county road, and electric power is available at the road. Although the property has frontage on the Estrella River, this waterway is typically dry and added no value to the property. The irrigated soils consist of 54.2% class 1, 7.1% class 3, 19.6% class 4, and 19.1% unrated, for an overall soil rating of 3.4. The San Luis Obispo County Land Use designation is AG, Agriculture. The shape is rectangular, and the topography is mildly sloped. Per FEMA, approximately 37% of the property is in Flood Zone A, an area of 1% annual chance flood hazard.

Like its south adjacent neighbor (Sale-1), this comparable has several similarities with the subject: it is mildly sloping non-irrigated agriculture land in the same AVA, with nearly identical soil ratings. Negative attributes are Flood Zone A, inferior perimeter fencing, and the larger size, more than double that of the subject, which is indicative of a lower unit value. However, these factors are outweighed by the direct paved road access and proximity to electric power. Placing more weight on the paved road access, this sale indicates a unit value less than $8,715 per acre for the subject.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 37
Comparable Land Sale 3
This sale was 82.4± acres of agricultural land located on the Southside of Dry Creek Road, East of Aerotech Center Way in rural San Luis Obispo County approximately 5-
miles east of central Paso Robles, California. Escrow
closed March 5, 2021, for $500,000, or $6,068 per acre, in an all-cash transaction. The listing agent said there were no atypical sale conditions. The property has
historically been used for grazing, with a reservoir fed by a groundwater well. Per the Groundwater Sustainability
Plan (GSP), this property has no additional groundwater rights necessary for expanding commercial agriculture
use and these rights haven’t been obtained through
offsets. Access is via a paved county road, and electric power and sewer were available at the road.

Irrigated soils consist of 8.1% class 2, 34.9% class 3, 4.7% class 4, 13% class 6, 14.8% class 7, and 24.4% unrated for an overall soil rating of 5.7. The City of Paso Robles Land Use designation is AG, Agriculture.

The shape is irregular, and the topography is mildly to steeply sloped. Per FEMA, approximately 45% of the property is in Flood Zone A, an area of 1% annual chance flood hazard.

Although this comparable sale has a well and reservoir the subject lacks, these water sources are insufficient for expanding commercial agriculture use. Other positive attributes are the direct paved road access and the electricity and sewer available at the road. Conversely, negative attributes are the irregular shape, inferior perimeter fencing, topography, Flood Zone A, soil ratings, and much larger size, nearly four times that of the subject, which indicates a lower unit value. Overall, the combined weight of the inferior factors outweighs the positive factors; therefore, this sale warrants a subject unit value above $6,068 per acre.

Comparable Sale 4
This sale totaled 19.4± acres (865,064± square-feet) of vacant agriculture/industrial land located at 5175
Airport Road, Paso Robles, California. Escrow closed
June 19, 2019, for $2,325,000, or $119,845 per acre, in an all-cash transaction. This was a 1031 exchange for
the seller, and the buyer’s broker said there were no
other atypical sale conditions. The sellers previously
planted field crops. The buyer has submitted plans to
subdivide the property and develop a winery (no
vineyard) on one portion and sell the remaining 5-
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 38
acres. Utilities included electric power and municipal water and sewer connected to an older residence that added no value to the sale price and was demolished post sale to make room for the winery. The irrigated soils are 100% class 3. The City of Paso Robles General Plan designates the property as BP, Business Park, and the zoning is M PD, Industrial, Planned Development. The site is level to grade with rectangle shape. According to FEMA, the site is in Flood Zone X, unshaded, an area of minimal flood hazard.

This sale is proximate to the subject and has similar zoning, flood zone, soil quality, and size. However, access to municipal utilities and enjoys paved road access. Therefore, this sale indicates a subject unit value well below $119,845 per acre.

A comparison grid of the sales discussed above is presented below.

LAND VALUE CONCLUSION
Based on the previous discussion, the comparable sales indicate the subject bracketed value range is from $8,715 to $10,045 per acre as shown in the following table.

Sale No. Subject Value Less Than /
Greater Than Sale Price /Acre Sale Date Size (Acres)
S-4 < $119,845 6/19/2019 19.40±
S-1 < $10,045 4/15/2022 44.80±
The Subject unit value range is greater than $8,715 and less than $10,045 per acre.

S-2 ≥ $8,715 7/28/2021 45.90±
S-3 > $6,068 3/5/2021 82.40±
The top of the range is represented by S-5, which benefits from municipal utilities and related infrastructure the subject does not enjoy.

Based on the preceding comparable analysis, the subject is bracketed by S-1 and S-2, respectively $10,045 and $8,715 per acre. The positive electric power availability and negative larger size for both comparables generally offset one another. However, for S-1, the deciding factor was the paved road access. Conversely, while S-2 enjoys the same paved road access, this was offset by the flood zone. Therefore, placing more weight on S-2, a unit value of $8,750 per acre for the subject is concluded and is well supported by the comparable data.

Value of the Subject

22.08± Acres x $8,750 /Acre = $ 193,200
Rounded $ 193,000
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 39

VALUE OF THE GROUND LEASE
The solar company signed a 20-year lease in 2020 and have a power purchase agreement that essentially states that until they start producing power no rent is due. However, once the proposed solar array is producing power, rent will then be based on a percentage of the revenue produced.

The next step in the valuation is to estimate a market rate of return to the fee value of the land in order to estimate market rent. Although there are inherent challenges with estimating a rate of return, there are various sources of rates of return that we will consider, including investor surveys and ground leases.

INVESTOR SURVEY
One method of determining an appropriate rate of return is to look at a published investor survey for land leases. One of the most widely used and respected publications is the RealtyRates.com Investor Survey.

The Investor Survey publishes prevailing land lease capitalization rates and discount rates on a national level. According to the publication, the former reflects initial rates of return on appraised values for vacant land proposed for development but does not address increases in land lease payments or the reversion but may include percentage rent. These rates are considered more applicable to the subject. The latter are internal rates of return being achieved by landowners on improved properties. As such, they include changes in land lease payments, percentage rent where applicable and the reversion of the entire property at the termination of the lease. These rates are not really applicable to the subject since no improvements are being analyzed for this analysis.

The following table summarizes the information for 4th Quarter 2022 data from RealtyRates.com.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 40
The subject’s special purpose use displays a range in cap rates from 4.04% to 16.88%. The subject property would likely see cap rates toward the middle of the range given the high demand for more typical special purpose uses. Overall, given that these are broad and general ranges across the national marketplace, guarded reliance is placed on these investor surveys.

GROUND LEASE CAPITALIZATION RATES
Another method of estimating a rate of return is by examining ground lease discount rates in the region relative to special purpose land prices. Market transactions of ground leases for special purpose properties in the region are essentially non-existent. Accordingly, sales of all property types on ground leases were surveyed in the San Luis Obispo County and the adjacent Kern County to extract cap rates from the market. The results of that survey are presented below.

San Luis Obispo County and Kern County Ground Lease Survey City Property Type Bldg Size (SF) Tenant Sale Date Sale Price Cap Rate Bakersfield QSR 2,200 Starbucks Oct-22 $2,666,667 3.75% Buttonwillow QSR 4,187 Carl's Jr. Jul-22 $2,467,829 5.25% Nipomo QSR 1,000 Dutch Bros. Jul-22 $2,800,000 3.75%
Bakersfield QSR 1,820 Carl's Jr. Jun-22 $2,800,000 3.93% Bakersfield QSR 3,200 Carl's Jr. Jun-22 $2,150,000 4.45% Bakersfield QSR 2,510 Jack In the Box Mar-22 $2,025,000 4.48% Bakersfield QSR 2,080 Tacos La Villa Feb-22 $1,720,000 5.23% Bakersfield QSR 856 Dutch Bros. Jan-22 $2,225,000 4.00% Arroyo Grande QSR 2,040 Dutch Bros. Jun-21 $2,828,000 4.35% Santa Maria QSR 862 Dutch Bros. Mar-21 $2,762,500 4.52% Atascadero QSR 2,800 Burger King Dec-20 $1,450,000 4.11% Cap rates for ground lease sales will largely depend on the creditworthiness of the tenant, the remaining lease term, and the age and condition of the building improvements. The range displayed in the market is nonetheless relatively narrow, between 3.75% and 5.25%. However, the cap rates presented above represent improved properties, which carry less risk. Further, the bulk of these tenants are national fast food and retail chains that are considered to carry minimal risk from an investor’s perspective. Per conversations with local market participants, when dealing with atypical ground lease property types,

8.0% is typically used as a base cap rate, and then adjustments are made from there to account for specific risk characteristics such as location, quality of the tenant, overarching market conditions, etc. The subject property would be considered relatively safe given the robust market conditions. Accordingly, a cap rate below 8.0%, consistent with the rates displayed in the sales above, would be appropriate for this portion of the site. However, the airfield zone of the subject would likely be perceived to carry slightly more risk given the less intensive allowable uses. Though it is noted that there is still strong demand for those uses, a cap rate above the range displayed by the ground lease sales is warranted for that portion of the property.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 41

RECONCILIATION OF RATES AND CONCLUSION
Based on the investor survey and the market ground lease sales, appropriate rates for the subject can be determined. The indicated cap rate ranges are summarized below.

Indicated Market Cap Rates
Minimum Maximum Average
Investor Survey 4.04% 16.88% 9.57%
Ground Leases 3.75% 5.25% 4.35%
For special purpose properties such as the subject, an appropriate cap rate should still be above those displayed by the quick-serve restaurants with national credit tenants on long-term deals. However, a rate below the special use average of 9.57% is warranted given the limited risk associated with long term leases such as the 20-year term for the subject. Therefore, a concluded rate of 8.0% is appropriate for the general industrial portion of the subject property.

CONCLUSION OF MARKET GROUND LEASE RATE
Based on the previously concluded land values and cap rates, the concluded fair market lease rate for the subject property is summarized in the following table.

Market Ground Lease Rate Summary as of November 15, 2022 Size (Ac) Price /Ac Indicated
Land Value
Cap Rate Indicated Annual
Rent

22.08 $8,750 $193,200 8.0% $15,456
The rounded annual rent is concluded to be $15,500.

OPINION OF MARKET VALUE
The rounded market value of the subject property is concluded as:

One Hundred Ninety-three Thousand Dollars
($193,000)
The rounded annual ground lease value is determined to be:

Fifteen Thousand Five Hundred Dollars
($15,500)
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176 42

APPENDIX
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176
APPRAISERS’ CERTIFICATIONS
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATION
I certify that, to the best of my knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.

4. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

5. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

6. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute.

9. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

10. As of the date of this report, I have completed the continuing education requirements for designated members of the Appraisal Institute.

11. I have not made a personal inspection of the property that is the subject of this report.

12. I have not revealed the findings and results of this appraisal to anyone other than the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

13. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176

14. To the best of my knowledge, no portion of the value of the property appraised consists of items which are non-compensable under the established laws of California.

15. My opinion of the total fair market value of the appraised property identified in this report was derived without collusion, coercion or direction as to value.

16. I have neither appraised nor provided any services on this property within the last three years.

17. Fred McGrew provided significant assistance in the preparation of this report including determination of the appraisal problem, collection and analysis of the data, highest and best use analysis, valuation analysis, and the reconciliation in this report under the direct supervision of the undersigned.

David C. Houghton, MAI
Certified General Real Estate Appraiser
California Certificate No. AG039402
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176
APPRAISER’S CERTIFICATION
I certify that, to the best of our knowledge and belief:

1. The statements of fact contained in this report are true and correct.

2. The analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are my personal, impartial and unbiased and professional analyses, opinions and conclusions.

3. I have no present or prospective interest in the property that is the subject of this report, and I have no personal interest with respect to the parties involved.

4. I have neither appraised nor provided any service pertaining to the subject property in the past three years.

5. I have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment.

6. My engagement in this assignment was not contingent upon developing or reporting predetermined results.

7. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal.

8. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice (USPAP).

9. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of Professional Appraisal Practice of the Appraisal Institute, which include the Uniform Standards of Professional Appraisal Practice.

10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives.

11. I have neither appraised nor provided any service pertaining to the subject property in the past three years.

12. I have made a personal inspection of the property that is the subject of this report.

13. I have not revealed the findings and results of this appraisal to anyone other than the proper officials of the client and I will not do so unless and until authorized by the client, or until I am required to do so by due process of law, or until I am released from this obligation by having publicly testified as to such findings.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176

14. Such appraisal has been made in conformity with the appropriate California laws, Title VI of the 1964 Civil Rights Act, and regulations, policies, and procedures applicable to appraisal of right of way.

15. My opinion of the total fair market value of the appraised property identified in this report was derived without collusion, coercion, or direction as to value.

16. To the best of my knowledge, no portion of the value of the property appraised consists of items which are non-compensable under the established laws of California. It is my understanding that federal funds may be involved in the project that pertains to the subject of this report.

17. Fred McGrew significant assistance in the preparation of this report including determination of the appraisal problem, collection and analysis of the data, highest and best use analysis, valuation analysis, and the reconciliation in this report under the direct supervision of the undersigned.

Ross M. Campbell
Certified General Real Estate Appraiser
California Certificate No. 3003418
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
View of the subject facing East
View of subject 1.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176

SUBJECT PHOTOGRAPHS
View of subject 2
View of subject fencing.

Attachment 3

Appraisal for Paso Robles Municipal Airport
City of Paso Robles Property
Solar Ground Lease Site
Paso Robles, California
BRI 22-176
APPRAISERS’ QUALIFICATIONS
Attachment 3

professional
qualifications
david houghton, MAI
Manager of Agency Appraisal
David Houghton is a Senior Appraiser with Bender Rosenthal (BRI). He has been involved in real estate appraising since 2005 and is a Certifi ed General Appraiser in the State of California. He has professional experience appraising a wide range of property types, including industrial, offi ce, medical offi ce, retail, multifamily, condemnation, right of way, residential subdivisions, and various agricultural/rural residential property types.

Between 2007 and 2014 he worked exclusively on low income housing appraisal assignments. While focused on that specialty, Dave gained experience appraising aff ordable housing and conducting market studies for Low Income Housing Tax Credit (LIHTC) developers. In 2014, David began working with BRI and has since shifted his focus and expertise into right of way appraisal assignments.

Geographically, Dave has appraised properties and completed market studies throughout Southern and Northern California, Washington, Hawaii, and Nevada, with the bulk of the experience in Southern and Northern California.

YEARS OF EXPERIENCE
17 Years (with BRI since 2014)

EDUCATION
BS, Science of Business
Management
University of Phoenix
Phoenix, Arizona

PROFESSIONAL REGISTRATIONS
California Certifi ed General
Real Estate Appraiser
AG 39402
Professional Affiliations
Northern California Chapter of
Appraisal Institute
Designations
MAI, Appraisal Institute
representative valuations include
Offi ce – Existing and proposed offi ce properties in Sacramento Region and Central Valley.

Retail – Existing and proposed retail properties in Northern and Southern California.

Industrial – Existing and proposed industrial properties in Sacramento Region and Central Valley.

Multi-family – Existing and proposed multi-family properties in Northern and Southern California, the state of Washington, New Mexico, Nevada and Hawaii.

Mixed Use – Existing and proposed mixed use properties in Northern and Southern California.

Subdivision – Proposed residential subdivisions in Sacramento Region and Central Valley.

Eminent Domain – Improved and unimproved properties involving full and partial takings for municipalities, quasi-public companies, and property owners.

Agricultural – Vineyards, dairies, orchards, fi eld/row crop land, and rural residential properties.

Land – Various types of land appraised such as commercial land, retail pad sites, residential land, transitional land, and agricultural/ rural residential land.

Multi-family Market Studies – Existing and proposed multi-family LIHTC/HUD/USDA properties in Northern and Southern California, the state of Washington, New Mexico, Nevada and Hawaii.

Headquarters: 2825 WaƩ Avenue, Suite 200 | Sacramento, CA 95821 | 916.978.4900 Attachment 3

professional
qualifications
Ross campbell
Appraiser
Ross Campbell has been involved in real estate appraising and consulting since 2011. His professional experience in real estate appraisal encompasses a broad range of property types including industrial, office, retail, single family, multi-family, residential subdivisions, agricultural, transitional, and various types of land. Ross also has right of way experience involving both partial and full acquisitions, complex damage/benefit analysis, crop loss scenarios, transportation and utility projects. Over the course of his career he has worked on several specialty property types/projects of note which encompass cell tower sites, water related use properties (both inland and oceanfront), mitigation work, contamination issues, corridor valuations, title claims, conservation easements, and shelter valuation.

Ross received his Bachelor’s degrees in Economics and Sociology:

Organizational Studies, respectively, from The University of California at Davis. He continues his education with courses from the Appraisal Institute and the International Right of Way Association in pursuit of a professional designation.

YEARS OF EXPERIENCE
11 Years (with BRI since 2011)

EDUCATION
BA, Economics
University of California
Davis, California
BA, Sociology: Organizational
Studies
University of California
Davis, California

PROFESSIONAL REGISTRATIONS
California Certified General
Real Estate Appraiser
AG 3003418
Professional Affiliations
Sacramento-Sierra Chapter of
Appraisal Institute
representative valuations include
Industrial – Existing and proposed distribution, storage, and research and development properties.

Office – Existing and proposed general-office, medical-office, and dental-office developments.

Retail – Existing and proposed shopping centers, mixed-use buildings, and restaurants.

Single-Family Residential – Existing and proposed residential subdivisions.

Multifamily Residential – Existing and proposed apartment complexes and condominiums.

Agricultural – Field and row crops, conservation easements, and rural-residential properties.

Land – Retail, office, residential, industrial, transitional, and agricultural land.

Special Use – Cell tower sites, water related sites, transportation and utility corridors.

Eminent Domain – Improved and unimproved properties involving full and partial acquisitions.

Headquarters: 2825 Watt Avenue, Suite 200 | Sacramento, CA 95821 | 916.978.4900 Attachment 3

Attachment 4
RESOLUTION NO. 23-XXX

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES

APPROVING AN UPDATE TO THE AIRPORT LEASING POLICY AND LEASING STRATAGY WHEREAS, the Airport Leasing Policy was adopted by the City Council on June 6, 2017. The document provides guidance on new lease requests and the reversion and extension process for those that are expiring; and
WHEREAS, in order to more fully comply with current FAA guidelines and market requests, the Airport Commission and City recognized the need for modifications to the existing Lease Policy document. and developed the proposed policy revisions which are commensurate with increased FAA policy direction and California State Law pertaining to leasing at airports; and WHEREAS, the essential elements of the revision are as follows:
a.) In the case that existing lease agreements cannot be extended because their combined length would then exceed the 35-40 year limit per FAA guidance:
 At expiration, with no development proposed, existing lessees may enter into a new short-term agreement (5 years);
 At expiration, with commensurate capital investment, existing lessees may enter into a new long-term agreement;
b.) Clarifications were made to the City’s obligatory reversionary rights. Rental rates for any new lease agreement consider the Airport’s ownership of the improvements; c.) Existing reversionary language will be honored upon expiration with any subsequent lease agreements including updated language;
d.) In accordance with FAA orders and guidelines, rental rates for leases on non-aeronautical sites will be based on Fair Market Value and rental rates for aeronautical sites based on fair and reasonable value as established for the site.; and
WHEREAS, associated with the policy updates is a leasing strategy developed to standardize and provide a framework to negotiate expiring leases and new development inquiries promoting an equitable approach to leasing parcels at the Airport with the goal of financial self-sufficiency; and WHEREAS, following FAA guidance, periodic market appraisals of Airport lands are used as the basis for the proposed lease rates associated with the leasing strategy; and WHEREAS, as an attachment to the Lease Policy, the Airports Standard Lease document was recently revised to reflect FAA policy guidance and industry trends. The essential elements of the revision are as follows:
 In addition to the yearly Consumer Price Index (CPI) adjustments, rent adjustments can be made every 5 years by representative appraisal. Increases are capped at 20% over a 5-year period;
 A new monthly Base Rent shall be determined by representative appraisal at the expiration of the initial lease term and as a condition to exercise any renewal options; and  An additional event of default is established to address the failure to complete proposed development within the agreed upon timeframe.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF EL PASO DE ROBLES DOES HEREBY RESOLVE AS FOLLOWS:

Section 1. All of the above recitals are true and correct and incorporated herein by reference.

Section 2. The City Council hereby approves the updated Airport Leasing policy and attached standard lease document dated March 2023, attached hereto as Exhibit A, and incorporated herein by reference.

APPROVED this 2rd day of May, 2023, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

Steven W. Martin, Mayor
ATTEST:

Melissa Boyer, City Clerk